SCOTTISH retailers are battling a perfect storm: costs are rising across the board on products, staffing and property while at the same time the sector is experiencing a drop in consumer confidence and spending, and consumer shopping habits are changing.

In a bid to cope, retailers have become overly reliant on discounting — data compiled by retail analytics business Mallzee shows 48 per cent of high street fashion was discounted in the first three months of 2017 compared to 27 per cent for the same period in 2016.

But discounting is a short term, sticking plaster solution, according to founder and CEO of Mallzee Cally Russell, who believes retailers should be focusing on maximising the profitability of every product in their range and not leading consumers to expect discounts. He believes retailers need to fully understand their product performance and customers in order to survive.

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Which is why he launched Mallzee. Russell, one of Forbes 30 under 30 To Watch, came up with the idea for Mallzee in 2012 when he was searching to buy a pair of black jeans via his mobile and getting frustrated with the disjointed experience.

“I developed an app bringing high street retailers together in one place to allow users to search, compare and buy items in a fun and efficient way,” says Russell. “Mallzee was the first app to apply a Tinder style swiping technology to a different industry. Users swipe to like items, which are saved in their unique user profiles and generate price drop notifications should they go on sale.”

Now with almost one million users generating over 20 million product ratings each month Russell and his team have harnessed this unique data to launch two B2B products — Product Intelligence and Product Future — technology driven data dashboards giving real time customer actionable insights on product, overlaid with demographic information to help retailers improve their marketing, merchandising, product pricing and stock ordering.

A recent McKinsey report highlighted the impact minimal pricing tweaks can make; simply changing a pricing strategy by one per cent can increase profitability by 8.75 per cent.

Mallzee also helps retailers test potential future products before they are brought to market thus enabling them to order stock based on predicted need.

Russell explains: “We recently tested nine watches for a retailer before they brought them to market and the results were quite astonishing — the best performing and worst performing were exactly the same watch but in different colours.

“Mallzee predicted one would outsell the other 3:1 which enabled the retailer to order stock accordingly.”

But all the technology in the world won’t save the retail sector unless they change their attitudes, he says.

“With over 150 retailers full ranges featured in Mallzee we are in the privileged position of being able to spot trends in retailer habits quickly.

“This dramatic increase in discounting appears to correlate to all the recent warnings on the state of our high streets balance sheet.

“We think there is lots of support that can help but the main shift requires retailers changing their approach.”