What Augustin didn’t do
What Augustin did was a radical change towards how Emilia would position themselves as a retail store continent-wide; straying away from perpetual discounting. However, as the article suggests, this change was based on a lot of empirical data and his experiences in his previous company Xela. While those may be strong signals that his new strategy would work, the most important variable wasn’t considered – the Emilia factor. The best way to make a significant change like this work, is if experiments at a smaller scale were conducted first. They mentioned that store changes were happening at all location around Europe, but what I would do is start small at a couple of stores and see if there are promising results. If so, then try to scale up and start doing the same thing at larger more important stores. A very important point here is to not start too small so that the results aren’t useful for the leaping to the next stage of experimentation. Conversely, if the experiements fell flat, there could be subsequent tests ran to see why they failed – is it something in the details that caused the failure? or was it something more on a conceptual level that will need a major overhaul/pivot to accommodate? This way Augustin wouldn’t have to lose 211 million euros of revenue in the process. The point of experiments is so that you can adjust and be nimble if you have to as you gather more data!
What I would advise
I agree with what Yashodhara advised; Augustin was right in that discounts wouldn’t be the end all be all for Emilia. It isn’t sustainable, and it’s a lose lose situation between the buyers and the sellers. What Augustin could do better is ease Emilia’s process in habituating their customers to let go of discounts. Such radical change has seldom been welcomed by your typical customer. Yashodhara’s case study with ffolio is a great idea; only offer discount at end-of-season, or only offer them on specific items that would get people into the store. Essentially, use discounts more sparingly, but when you do, do it strategically. This way, you get to appeal to the customer’s desire to get a bargain, and at the same time, not devalue the other products which could be sold at a premium. As discussed before, I would also run some A/B tests on several stores to determine which products are best to be used for discounts. Once we get the promising data, then we scale contintent-wide.
