Retail · Winning on Experience

The retail war of attrition

Walk through just about any mall this time of year and you’re met with a visual cacophony of promotional signs adorning every window.

Enter just about any store and it quickly gets worse. Circulars with “special” coupons cram the entryways. Racks and tables are laden with signs shouting the latest discount. 30% is good, but 40% is better. And hey, why not 50% off?

At the register, sales associates beckon you to save an extra 10% when you open a new credit card account.

“Door-busters!” “Lowest Prices of the Season!” “Super Saturday!” “Exclusive Offer!” “Family and Friends Special Savings!” And on and on.

It’s no better online. The same discounts one finds in-store dominate most retailer’s home pages, complemented by a nice smattering of free shipping deals. And our in-boxes are chock-a-block with daily promotional emails.

Of course, retailers brought this promotionally intensive world upon themselves. They stuck the endless discount needle in their arm many years ago and, like a hapless junkie, they go back to it again and again even though they are keenly aware of the damage they are doing.

Consumers caught on long ago. It’s a pricing game of chicken and we’d be stupid to pay the sucker price? There’s always a better deal around the corner and we’re determined to get it.

The one thing we can be sure of is that this isn’t going to end any time soon. As long as retailers perceive that it’s largely a zero sum game, and they risk losing a marginally cash positive transaction, they will continue to discount early and discount often.

Unless you are the lowest cost provider trying to own “discount” is a fool’s errand. A continuing race to the bottom just makes this a retail war of attrition.

And for marginal players that is a very bad thing indeed.

 

 

 

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