Up With Customer Service, Down With Discounts – 5/1/10

Time Online posed an interesting question in the form of their eye-grabbing title: It Was An Awful Year For The Economy. But A Great One For The Consumer?

Our answer? In reference to luxury goods, customer service has improved incredibly. And customers have been picking up some great discounted sales, but at the detriment to the stores' profit. Our take on heavy discounting has always been that it’s not the best marketing strategy, or the answer to securing long-term, sustainable and loyal business.

Locally, an article in The Australian reported that Myer’s December trade was affected by "very heavy discounting”.

We wonder if too much discounting is conditioning the consumer to only purchase at discount? Especially given Myer and premium-end department store David Jones are on-sale in some departments almost 350 days per year. Are retailers creating a consumer who will not pay 'full price' and will be loyal on discount only? Perhaps it will become a case of the stores ‘marking up’ initially to ‘mark down’ and still achieve their normal gross margins…?

For more of our thoughts on the discounting debate, click here to go to our July 14 article.