"Discounting has been part of retail's toolkit for decades, and it can be effective, especially during high-stakes shopping seasons. But as promotions become more frequent across the industry, companies are taking a closer look at the downside: Short-term sales gains don't always come with long-term loyalty or durable margins, and customers remember how a brand made them feel far more than what they saved at checkout."
"While the National Retail Federation pegged retail sales during the recent holiday shopping season to exceed $1 trillion, retailers saw fewer unit sales as shoppers dealt with tariff-driven sticker shock. As a result, 2025 marked a significant change in consumer behavior as shoppers across the board sought value and deals. That shift is likely to persist through 2026, increasing pressure on retailers to use markdowns to move inventory."
Discounting frequently boosts short-term sales but often fails to create long-term loyalty or durable margins, as customers remember brand experience more than savings. Experience-led value builds loyalty through moments that make customers feel recognized, appreciated, and confident in their choices. Competing primarily on discounts sacrifices those moments for short-term volume. Economic pressures in 2025 — tariff-driven sticker shock and fewer unit sales despite high nominal holiday spending — pushed shoppers to prioritize deals, likely extending into 2026. That environment increases pressure to mark down inventory, risking discounting becoming a strategy rather than a symptom. Operational improvements and promotions struggle to sustain profitability under weak demand.
Read at Fast Company
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