Discounting
We had an interesting conversation in our Senior Leadership Team meeting on Friday.
Effectively, the debate was around the role of Black Friday discounting and whether it actually works for anybody - the brands, the market or the end consumer.
From the brand side, it's margin erosive and trains the consumer to wait to purchase until the brand is on sale. That's obviously a terrible precedent to set and leads to the devaluing of brands that we've frequently seen, triggering the loss or debasement of so many fallen icons of years gone by.
On the consumer side, it doesn't really work either. Historically, Black Friday was a good way to clear through stock that didn't sell over the summer: by definition, the stuff that nobody wanted. Now, the consumer demand has now evolved into wanting fresh things in the sale all the time, not just last season's stuff. To combat that, the brands are simply buying in shittier product at lower cost to make sure that margins can still work after a 20% discount is applied. The consumer thinks they're getting a screaming bargain, but actually they're just getting tat.
Maybe we should step back and think about what we're really trying to achieve with discounting? Yes, it's great to feel like you've got a bargain, but there's no such thing as a free lunch, so the chances are you're just participating in this crazy illusion and buying shit you probably don't even need.
Next time you're looking at an amazing deal and you see the red strike through of the previous price and the new price underneath, question yourself whether the old price is really actually a thing, or whether it's a decoy just to trigger you into a purchase decision you wouldn't have made otherwise.
It's kind of a waste of everyone's time and energy. We should probably just pack it in.