Understanding When Retail Discounts Work — and When they Can Hurt Your Brand
Retail discounts are one of the most common sales tactics used globally. Across fashion, beauty and homewares, price reductions are often used to move stock, boost short-term sales, and attract new customers. But are discounts always the right strategy? And when might they actually undermine retail success?
Frequent retail discounting can create a cycle that’s difficult to escape. Yes, price drops may attract new customers — but do you want to attract shoppers who will only buy from you at the lowest price?
Over time, regular discounting teaches existing customers to wait for a sale, making full-price sales more difficult to achieve. Heavy discounting can result in:
When price becomes your main competitive tool, brand value, product quality and customer experience become secondary. This erodes long-term profitability and forces you into a “competing on price” strategy.
The key to effective retail discounting is understanding WHY you are discounting.
A discount shouldn’t be a knee-jerk reaction to slow
Discounting should not be your first reaction to slow sales! Rather than a blanket approach to ‘moving products’, consider what do you need as a business to justify a discount?
Retail discounts are powerful when they are strategic, not random or regular. They work best in situations like:
| Reason | Example |
|---|---|
| End-of-season | Clearing winter stock to make space for spring |
| Product line changes | Discounting discontinued items or remaining sizes |
| Introducing new customers | Targeted offers to specific groups (e.g., local garden club for garden products), not store-wide discounts |
| Rewarding loyalty | Exclusive offers for existing customers (it’s cheaper to retain a customer than acquire a new one) |
| Clearing older, damaged or returned stock | Discount only what can’t be sold as new |
| Incentivising an action | Offer a discount in exchange for valuable data and insights (polls, obtaining birthdates, shopping preferences, etc.) — e.g., find out whether customers like yours, shop on platforms like Amazon. |
In each of these cases, the discount has a purpose and a defined limit.
Once you know the reason behind the discount, consider:
What is the minimum discount needed to achieve the goal without eroding margin?
This often requires testing and reviewing results.
Before dropping the price, ask yourself:
Is the real problem the price — or is it positioning, visibility, storytelling, or trust?
Many products don’t sell because:
Improving presentation, storytelling and targeting can often shift stock without discounting at all.
Retailers can increase demand and move stock while protecting value using:
These increase perceived value without eroding your price points.
Discounting is a tool — not a solution.
Don’t discount to sell more stock by default.
Use discounts when they are:
✔️ planned
✔️ purposeful
✔️ tied to a clear business objective
Used wisely, retail discounts can stimulate sales and create space for new stock. When used broadly or reactively, they weaken your brand, reduce profitability, and create consumer expectations that harm not just your business — but the retail sector overall.
