Augustin made a number of unfounded assumptions:
1. Young people would be drawn to a store as a place to hang out and shop.
2. Even without the experience of bargain hunting, older customers would still spend more money there.
3. Due of their low prices, young people can afford their items.
4. Young people would spend more money there if the establishment had an honest business philosophy.
My recommendations to Augustin:
1. Use metrics the strategy of pivoting to more younger customers compared to a current clientele of middle aged customers who like bargain hunting.
2. Do A/B testing with a few stores or at the e-commerce site with honest prices vs. discounting.
3. Do customer satisfaction surveys to learn how the new mantra “Habla Claro” made them feel. Customers spend more with brands they feel attached to, like Apple.
4. Do customer interviews to understand why and how they like discounting.
5. Think of better models to have discounting. Before Augustine, the brand sold 72% products at 50%+ discount and average discounting went from 38% to 60%. Perhaps, they can strategically discount like:
5.1 : Only offer large discounts for branded items.
5.2 : Sell private labeled items next to branded items to “create the effect of a discount”
5.3 : Discount in off season instead of on season to drive more traffic
6. Do not ignore the internet as a fad but seriously ramp up the online retail experience or serve a client base that cannot visit the store due to proximity reasons.
7. Create a stronger brand or private label merchandising.
