Shoppers won't part easily with their beloved deals, as countless retailers have found out the hard way.
Men's Wearhouse (mw) is the latest to learn that painful lesson.
The clothier on Thursday reported that comparable sales at its Jos. A Bank chain of stores fell 14.6% in the quarter ended October 31, a result it called "far below" its forecasts.
The culprit of the bloodbath? Jos. A Bank's now abandoned classic "buy one, get-three-free" sales events. The company held its last such sale in October and called the aggressive pricing strategy "unsustainable" in its bid to turn Jos. A Bank into a billion-dollar retailer.
Dialling back the intensity of the promotions without dropping them altogether is a key part of Men's Wearhouse CEO Doug Ewert's strategy to update a 110-year-old brand that isn't drawing younger men. Jos. A Bank, which Men's Wearhouse bought in 2014 for $1.8 billion, is adding big-and-tall options, slim-fit styles and a shoe collection to expand its clientele.
“Jos. A. Bank is a brand that just needs some updating, and we’re updating that brand as aggressively as we can,” Ewert told Bloomberg in a recent interview. “There’s a lot to talk about besides just price.”
But for now, customers are still clearly focused on deals: the company expects the declines to worsen in the current quarter, forecasting comparable sales will fall between 20% and 25% as fewer shoppers come in and customers "adapt to the shift in the promotional strategy."
Men's Wearhouse is learning a lesson many retailing peers have learned in recent years: weaning shoppers off of discounting is hard.
J.C. Penney (jcp) saw sales fall 25% in 2012 after former CEO Ron Johnson jettisoned the coupons and constant discounting shoppers had come to expect. The department store is still reeling from that decision. Coach (coh), trying to restore some luster to its once upscale aura, saw huge double-digit percentage drop-offs when it eliminated a ton of online sales last year.
Still, Ewert insists the strategy is a winner long term.
"Despite these results, we continue to believe that transitioning away from the unsustainable promotional strategy we inherited from Jos. A. Bank and accelerating our new promotional strategy is the right thing to do," Ewert said in a statement.
Shoppers are hard to retrain. Men's Wearhouse is just the latest to realize that.