Retailers feel the ‘ouch’ in vouchers

Retailers feel the ‘ouch’ in vouchers

As sleigh bells were ringing, upmarket toy store Hamleys became the latest retailer to fall foul of its own online voucher offer, in a marketing blunder reminiscent of Hoover’s disastrous Air Miles promotion of the early 1990s.

In posters running beside escalators at Oxford Circus Tube station, the iconic London toy shop declared “The party goes on” promoting post-Christmas discounts. But it looked as if the party was going to be called off before Santa had even arrived, as consumers besieged its website in a bid to cash in on a technical glitch and snap up toys at huge discounts.

Consumers swapped information online and boasted of “pillaging” the Hamleys website, taking advantage of discount codes issued to staff of the Regent Street store. A computer hiccup meant site visitors could input the three discount codes, each worth a discount of 20% per cent, with one person claiming to have snapped up a snooker table usually costing £13,000 for little more than £5,000.

The discounts were withdrawn, but not before thousands of consumers had tried to bag a bargain.

Hamleys is not alone, with both Sainsbury’s and wine retailer Threshers having also been hit by their own discount schemes. As with Hamleys, it was hotukdeals.com that added to Sainsbury’s woes. Sainsbury’s found itself inundated with orders as consumers looked to get 60% off wine and beer. It withdrew the offer and blocked orders.

Triumph from adversity
Threshers also saw a 40% online discount, intended for staff and their friends and family, posted on websites and blogs. Yet, while Sainsbury’s and Hamleys sought to block the offers, Threshers took a different tack and left many wondering whether the discount was a stunt. After all, the alcohol retailer saw a 60% uplift in sales.

Mark Grice, managing director of Catalina Marketing, a specialist in sales promotions which distributes around 3.5 billion discount coupons in the US and the UK, points out the offer was not actually that substantial in Threshers’ case. “Given that Threshers has a permanent offer of three for two on wines – 33% off – this was in fact just 7% more than the usual offer,” he says. “Threshers says it is pleased, as it has shifted huge volumes of stock.” Although Hamleys denies reports that the fault left it short of stock, it did halt the offers, and like Sainsbury’s reneged on its initial offer of honouring orders.

Hamleys chief executive Nick Mather says: “We did intend to honour legitimate orders, but further investigation showed uses of multiple and expired codes contravening the terms and conditions of the offer. The publication of offer codes on the third-party forum sites (which did not represent us) was done so without the terms and conditions, resulting in confusion as to the legitimacy of the offer.

“Hamleys apologises for the confusion this has caused and for being unable to process the orders as we had hoped.” The toy retailer also initially labelled the orders as “fraudulent”, but later said it realised that customers were not intending to commit fraud.

Grice says this was a surprising reaction as the majority of customers no doubt acted in good faith. He adds: “Retailers are recognising that coupons are a specific, targeted call to action as opposed to a mass-market or in-store ad campaign. They are great way to drive incremental sales, but there is a risk with the Net – a lack of control.”

To err is human
Human error is also an issue, and is an area that must be monitored to ensure that a promotion is foolproof.

Hamleys says the incident highlights the perils of the Web and the fact retailers are still coming to grips with its reach.

Grice agrees: “The situation demonstrates the power of the Web in sharing information. Online discount coupons are part of the move from blanket marketing to more targeted approaches, but marketers underestimate consumers sharing offers and information. They must take care.”

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