Discounting Discounts: Low Price is Table Stakes Not a Competitive Advantage

I just received an email from Bloomingdales touting 75% off some men’s items.  What a great sale!  Except for the fact that I received an email the day before for some other outrageous deal from the luxury retailer along with similar emails from ten other retailers.  Enough already, I am now fully conditioned to never, ever pay full price for anything.  What’s even worse for retailers is that not only have they destroyed any loyalty I might have had, but at this point I’m completely fatigued of yet another great deal and just want to find the products I’m interested in at a fair price.

Enter Search, my new favorite retailer.  The rise of search across platforms enables me to find virtually anything in a simplified format and THEN choose where I’d like to purchase it.  This changes the purchase decision tree from a retailer-controlled model to a consumer-controlled model.  My decision tree is brand, selection, convenience and price.  Most retailers are stuck on price, deal, brand, selection, convenience.  I can get a low price but have to continually monitor multiple communications to do so or jump through some other hoop like price matching.

Laurie Sullivan points out in a recent Mediapost article that “Price mattered less to American consumers this holiday season.” She cited ForSee data showing that consumers were more satisfied with online retailers offering better selection, content and customer service.  As social platforms continue to reshape retail dynamics, relationships become the key driver for building long-term loyalty and ultimately profitability in the sector.  Final  holiday sales initially seemed promising but now look increasingly likely to actually be negative year over year when factoring in inflation according to USA Today. This left retailers in a margin depleting war, battling over the finite pool of consumers.

This trend will have a fatal impact on a full third of retailers operating today within the next three years as they engage in a fight over the most unprofitable customers.  Deals and discounts will never build a sustainable brand nor a relationship with consumers.  This can only be accomplished by the heavy lifting of listening to customers, creating a great product or service and delivering in a memorable way.  The thought that goes into the experience of opening the box of a new iPhone negates the need for offering a coupon, ever! 

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