"Discounts are a vicious circle"

As discounts are available throughout the year, many customers refuse to pay the full price. Some companies however think that vicious circle is unsustainable and try to step out of that loop.

Always sales?

“Black Friday”, “Cyber Monday”, “mid season sales”: discount festivals have been multiplying for years now, and they all come on top of the sales periods that already existed. Especially online, there seems to be no end to all the discounts: anyone who wants to invest a bit of time, can find a discount on his or her desired item almost anytime.

Even when discounts are limited by law, such as the period before the actual sales in Belgium, a lot of retailers and brands offer ways to avoid those laws. American retail analyst Deborah Weinswig has demonstrated that customers consider discounts as the norm, after comparing actual selling prices with what customers want to pay for fashion items over a period of three years. Weinswig says consumers are increasingly unlikely to pay the full price as they come across more discounts, luring retailers in a vicious circle.

Erosion

More discounts also lead to brand erosion, a phenomenon to which luxury brands are very sensitive. By lowering the bar to buy luxury items, the products become more ‘vulgar’ and brands cannot legitimise asking the full price any more – creating an unsustainable model, analysts say. FarFetch CEO José Neves says retailers should only allow very targeted discounts, and luxury brands should punish stores that ‘over-discount’: this is the only way to get back control over prices, he said last year at the New York Times International Luxury Conference.

Another way to circumvent discounts is making your brand rare and desirable: Rihanna’s Fenty brand only launches small, monthly collections through a limited number of sales channels. This way, an artificial scarcity means fans will still be willing to pay the full price.

Graanmarkt 13 in Antwerp, Belgium has abolished discounts altogether and has fared well, despite the first reactions being far from positive. Co-founder Ilse Cornelissens says she “felt the fashion system was broken and we needed a more sustainable approach, so we changed the store around completely: we dropped the major brands and chose brands that were seasonless, genderless and sizeless.” By adding that extra value, customers are again willing to pay the full price – once they have put the idea of constant discounts aside…