The race to the bottom

It’s June which means one thing from the retailers of Australia i.e. the discount assault is on!

I’m bombarded on my numerous screens and in retail environments by messages like, ‘Last chance for 80% off!’, “40% off everything now and next week we will take an extra 30% OFF!’

It’s quite overwhelming.

And, when a famous retailer states, “We’re giving away 100 Dollar bills for 50 bucks,” it’s fair to assume that no one really wants them and so we can conclude that heavily discounting retail in this way is ultimately a sinking ship.

Admittedly, it is June and the traditional ‘Sales’ time, but… WOW.

Walking through a mall with my teen sons recently made me realise how repelled the next consumer generation are to the school of discounting.  They happily walk through the retail paradise, not wanting anything on offer other than food, and I ask them as we stroll, “But what about all this clothing? Can I buy you a new sweater for the colder months? Isn’t this a brand you love?”

“No, Dad. This is all the stuff that no one wants… that’s why it’s on sale.”

So, it dawns on me, what counts for that generation is the merch from say, the latest You-Tuber they might follow or perhaps a product endorsed by a prolific Instagram influencer. They’ll patiently wait for the next production run in eight weeks, hoping their order will be processed and they don’t miss out. It reminded me of my student years, saving up for my first proper camera and how that 18-month process, the anticipation, emotionally almost beat the real thing.  I observe that all year crazy discounts breed only one type of customer, the one that accelerates the race to the bottom.

In today’s climate, any brand with a purpose must find that emotional connect. Because going to war on price alone guarantees only one thing – no one wins.

Bernd Winter

Bernd has worked on numerous retail clients from Louis Vuitton, to Georg Jensen, Oroton, Polo Ralph Lauren and Suzanne Grae.