Ethiopian Business Review

Holiday Discounts: Are They for Real?

Holyday is a time for family gatherings, eating, drinking and merriment. The New Year especially is a moment of fresh start and time for new plans new beginnings. But as is the case for every holyday, costs are involved in creating the joyful mood. Eating and drinking items are among the major expenditures in this regard. People also spend a whole lot on other consumer items as well. To compete for these customers and sway towards them businesses use different marketing tools at their disposal. One of these techniques especially employed during holiday season like the New Year is discounting.

In recent years most of the shops in the city, especially boutiques and clothing stores get adorned with discount labels as the date of the big day arrives.  Ebony Fashion, one of the shops in Dembel City Centre on Africa Avenue in Kirkos District, is one such shop.

The shop sells clothes and shoes for men and women, which it imports from Canada, according to Jamal Mohammed, the owner of the shop. On regular days, the price for a female dress goes for ETB300 birr to ETB550.

With a discount for the New Year holyday, however, the shop has availed these items from 180 birr to 295 birr. Males’ clothes are sold for a little higher than females’. Males’ jeans trousers are cut down to 360 birr from 600 birr for the upcoming New Year. 

Jamal is promoting his discount offers by distributing flyers and brochures . He says he has invested about ETB5,000 to promote his discounts on the streets.

Discount tags are even more observed on shops’ windows on the road from Bole Medanialem Church to Haya Hulet in Bole District.

Hirut Mulgeta is the owner of one of such shops. Hirut’s shop avails ladies’ cloths with discount offers that started in the mid August that extends through the upcoming Ethiopian Meskel holiday. Hirut buys second hand clothes from importers and sells them to her customers, who are mainly public and private sector employees that are price sensitive.

The shop is offering about 100 birr discount on most of the items it avails for the holiday. “About 30 pullovers which have been in the store for more than two months are sold out in just a little more than a week time,” she says

One of the shops on African Avenue advertising its discount rates

Discount, pricing as a marketing strategy, are seasonal offers given to customers for various objectives. One of the reasons for offering lower prices on products is clearing congested stock in the stores, according to Mulugeta G.Medihin, instructor in Marketing Department at School of Commerce. This a reason practiced by almost all the businesses that EBR talked to. “You need to clear the stock because you need money to buy the next stock,” Mulugeta says.

Widening customers’ base and nurturing positive relations with customers are two other reasons behind using discounting as a promotional tool, according to him. Seasonal sale offers are mechanisms by themselves to win the competition exerted by similar products. Such discounts are usually offered seasonally, during holyday seasons when spending on consumer products grow consequently. “In any of the cases, businesses would not lose offering discounts as they would profit from a larger volume of sales,” Mulgeta explains.

One of the peculiarities of the Ethiopian market as long as discounts and sales schemes are concerned is some traders posting discount advertisements to attract customers even when there is no discount at the time. “You have to be careful; not all discount tags are trustworthy,” says Netsanet Yemata, a saleswoman in her mid 20s with intimate knowledge of the sector.

Netsanet recently bought three jeans trousers for ETB 180 each and three tops for ETB 150 each from one of the shops with discount offers in Dembel City Centre and she claims to be sure about the genuineness of the discounts, as she know what the items used to cost on ordinary days.

There are some businesses that pretend as if they have Sale offers the whole year, and who always try to take advantage of the concept of discount offers, according to Netsanet. 

The whole idea of discounts is nothing but another fake promotional activity for  Meklit Meknonen, 31 and a private employee who lives in Nifas Silk Lafto District. Meklit was visiting the showroom of one of the manufacturers of furniture, around Saris when contacted by EBR on August 31, 2013. As she looks to change her old sofa with a new leather one, what matters for Meklit is finding the right place to purchase from. “All these shops here and there in the City with discount tags do not have a reputation to protect,” she says, her eyes set on a leather sofa with a price tag of ETB40,000 while explaining the pseudo discount tags in the city. One needs to deal with companies of long standing reputation, according to Meklit.

Bole Furniture is one of the furniture companies in the city offering discounts for its customers for this holiday season. One of the Company’s showrooms on the Africa Avenue has declared an average of 10Pct discount offers on its household furniture since the beginning of August. About ETB3,000 discount offer is posted on the fabric sofa, which normally costs ETB29,509. Bed has seen a downturn of ETB1,200 is claimed to be slashed from ETB12,900 worth bed. Closets are said to go down to ETB4,774 from a price of ETB5,304. “The sells for office furniture is not seasonal and do not fluctuate as well, while household furniture has peak and lean seasons,” says Abraham Berhe, marketing manager of furniture company explaining why household furniture are the only items with discount tags and not office furniture. 

The issue of trust on discount offers is not only the headache of customers, but the business people, too.  “I remember having customers who did not trust the first four discounts I offered in the early days of my business,” says Jamal.

For others like Abraham, posting false discount tags is a matter of posing a threat on one’s own business. “While doing business within an environment of a stiff competition, you cannot afford not to be trusted,” an opinion well shared by Mulgeta.   

Such manipulative practices are indications of poor business ethics and short term visions, which have adverse effects on the reputation of businesses, according to Mulgeta. “They do not have any scientific ground.”

For the marketing expert these fake promises of discounts are also indicative of poor regulatory framework in the market. In other countries, consumers’ associations watch closely such malpractices and fine businesses whenever discounts are found to be false. “It is fair to say that we don’t have such framework and organizations in our country,” says Mulgeta.

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