Why furniture retailer Freedom Australia is cutting prices on 5,000 items and ditching flash sales

Furniture retailer Freedom Australia says it is moving away from “potentially confusing” rolling sales in favour of an everyday low prices strategy, but one expert says completely removing the rush that sales events prompt could present challenges for the business.

The 36-year-old furniture and homewares business told Inside Retail this week that its new strategy will see the price points of 5,000 line items permanently dropped, given shoppers tend to be “frustrated” when they buy furniture items only to realise the next week that a sale has commenced.

“They are frustrated when they buy something and it goes on sale the next day, and they are frustrated when they find something they like but feel like they have to wait for it to go on sale,” Freedom’s managing director Tim Schaafsma said.

On Facebook, the business has invited shoppers to come ‘Shop the Drop’, with some key pieces now sitting at $600 below what they were previously offered under the old pricing strategy.

The move comes at an intense time for furniture and homewares retailing in Australia, where even Aldi has jumped in on the trend of offering simple and affordable pieces that look like higher-end offerings.

The online retail space has also seen competition for furniture and similar goods heating up: IBISWorld’s most recent research into online sales numbers reveals homewares and domestic goods now account for 10% of all online purchases, with the past five years being a significant period of acceleration as home owners and renovators look to more convenient delivery options for items.

Behavioural economics specialist Bri Williams says it’s a good choice to eliminate the possibility that customers might feel “ripped off” by items that go on sale after they have bought them.

“There is always a risk with sales of customers holding off that purchasing in anticipation of a better sale — so something might be promoted for forty percent off, but they wait for sixty percent,” she says.

“Retailers get into a cycle of discounting in these cases, and then it’s about maximising the discount.”

SmartCompany has contacted Freedom Australia but it did not provide comment prior to publication.

Choosing a price to keep customers engaged

While Williams believes Freedom’s price drop is a sound strategy given the competition and challenges in the space, she observes that businesses need to think about the range of implications that come with dropping prices for good.

One challenge that comes from moving away from big sales events is that a retailer removes the natural adrenaline rush that accompanies buying a big item at a discount.

“This [pricing strategy] has failed for some retailers in the United States, because people do love a sale. It may be more attractive to them to shop elsewhere, because shoppers go, ‘they have a thirty percent off sale over there, so I’m going’.”

One strategy retailers could think about to secure a purchase is to have a cash-back policy if an item a customer buys then goes on sale shortly afterwards, Williams says.

“A lot of retailers in furniture have tried a price guarantee, where they refund the difference in this case. The idea is that they are securing a sale today.”

While low prices are always a priority for shoppers, Williams says the truth is customers always love “the thrill of the chase”.

When it comes to Freedom, she suspects the strategy will see them play in “the middle space” when it comes to homewares.

“It [the strategy] is providing that level of assurance that whether you go today or next week, the pricing will be the same.”

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