How a misguided emphasis on discounts causes brands to de-value themselves
Recently, the New York Times published It’s Discounted, but Is It a Deal? How List Prices Lost Their Meaning, which explores the recurrent issues with the suggested retail price of an item and the subsequent discounts that are granted in order to spark a purchase from deal-hungry consumers. To put it simply, a retailer prices a bed set at $300, but consistently sells it for at least 30 percent off. Well, was that bed set ever really worth $300?
Essentially, what many brands, specifically brick-and-mortar retailers, have done wrong is to succumb to price. They’ve created a body of consumers who will simply hold out for a sale rather than purchasing those shoes or that sweater that is new in store. Why? Because there is always another sale. And if it’s not at your store, it’s at someone else’s. And shoppers are more than willing to go to store X versus store Y because, well, the product is the same and the experience is interchangeable.
Now don’t get me wrong, sales are necessary to clear out merchandise and spark shopper interest. However, consistently devaluing merchandise to drive shoppers in-store and motivate a purchase is a poor strategy. What has occurred as brands have over emphasized the ability to ‘get a deal,’ is that brands have essentially de-valued themselves. Solely stressing discounts does not create loyal customers, it merely attracts those shoppers who are most loyal to price; cost-cutting does not enable longevity in this highly competitive landscape, either.
In this retailer-eat-retailer world, in which brick-and-mortar is constantly being proclaimed a failure and Amazon is heralded as the Grim Reaper of the industry, physical retailers need to go back to their roots: service, quality and value. They should analyze the current state of their operations, scrutinize their brand promise, and evaluate current performance to ultimately leverage thoughtful strategies that drive differentiation in the marketplace.
For example, if I’m able to purchase sunglasses online for $100 and in-store for the same price, I’ll likely buy online; however, if your store offers one-on-one service with a product expert, in which I’ll be able to receive an eye exam, try on multiple pairs of glasses, and obtain free adjustments following a purchase, I’ll go in store every time. By providing fantastic assistance and value-added services, a physical retailer eliminates the allure of the buy-now button and essentially positions free shipping as a consolation prize for all of the perks a shopper won’t receive as a result of buying online.
Ultimately, brick-and-mortar retailers need to optimize the exact thing that separates their brand from pure-play online retailers —the physical store – and drive their value proposition through that medium versus giving in to price wars. The physical store can and should enable a retailer to elevate themselves far above online by employing much more than door busters and one day sales.