Why would anyone purchase anything at list price? Today’s marketers continually believe the best way to move merchandise is to put it on sale. Stories no longer seem to be thought viable. And we all thought Amazon was to blame for the price dropping game.
Every marketer knows that email remains a powerful tool to build brand awareness and the email’s subject line is your brand’s calling card. Do you really want it to be all about how much today’s discount is? Can your brand only motivate people to open your marketing emails by shouting your products are marked down?
So after a consistent barrage of XX% off and free freight on any purchase, do you really think people are going to look at your brand as anything but a discount brand? Even powerhouse home brands such as Restoration Hardware and Williams Sonoma seem to run 50% off sales every other day. Why do I want to buy something that no one else wants?
Then think of the poor salespeople in the brick and mortar showroom. The first thing they must do every day is check to see what is on sale today. It is just like working in a supermarket and we all know how low their margins are. It is not sustainable.
As long as sales volume and product turnover remains high, these companies can get away with thinning profit margins but when a slowdown comes and sales drop 5%, that low, discounted margin might not be able to cover overhead and viola, losses appear. Then what happens? The markdown habit a brand gets into in good times are nearly impossible to break in bad times. Quarter to quarter planning is not a good play in the long game.