“Sometimes I feel like plastering my windows with posters advertising ‘0% off everything’!”. 

The words of an exasperated (now retired) health store retailer made in response to an outbreak of ‘discountitis’ in her town. They came back to me doing a recent Health Stores UK Shop Talk session, when the discussion turned to promotions and discounts. 

One retailer declared that they “loathed and detested discounts”, with the proviso “unless they are strategic”. 

Broadly, there was agreement that there is a place for ‘smart discounting’ in independent health food retailing (for example, strategic discounts on lead products and ‘bundling’), but that discounting across a whole range “actually discourages loyalty”. 

The pros and cons of discounting for small retail business are broadly summarised like this: 

The bad

• Reduced profit margins 
• Devalued brand image 
• Customers get used to, and expect, discounts 
• Price wars with competitor businesses (reducing margins for everyone)]

The beneficial

• Boosting sales in slow periods 
• Clearing out old inventory 
• When targeted, discounts can be used as part of customer loyalty programme 

What’s your own experience as a retailer? Is discounting for dummies, or a tool to stay competitive and build customer loyalty. Let us know in the ‘leave a reply’ box below