Instead of our usual presentation of a hot trend in this space, let’s take a look at a trend you perhaps would be better off staying away from: promotions, deals, and bargains.
Yes, we’ve all been told that consumers are bargain hunters and the best way to reach them if to offer them the deals they’re seeking. But NPD Group calls the practice “Promotion-Creep” and warns about a “race to the bottom.”
NPD includes Promotion Creep as one of their five consumer trends to watch for 2020 and notes that “consumers continue to be ‘trained’ to seek deals.” If you take a look at the apparel market, you see the off-price channel, where consumers pay nearly 60% less for products compared to department stores, experienced 3% sales growth, while total apparel sales declined 3%.
The problem is, says NPD, if promotional discounts become the norm, consumers will come to expect them over the long-term. As NPD Chief Industry Advisor Marshal Cohen recently told The New York Times, “You have to be one of the most unlucky people in America if you are paying full price for anything these days.”
No category is exempt—NPD reports there’s deal-seeking going on in luxury industries, which used to be “immune to discounting.”
Obviously bigger businesses can better weather the discount storm. Small businesses should never compete on price anyway. Cohen says, “Promotional pricing to drive sales rather than just manage inventory is a dangerous precedent. Retailers need to learn how to use promotional pricing responsibly, and not allow it to consume their industry.”
In addition to following Cohen’s advice, remember why consumers like to shop small retailers and e-tailers in the first place—personalized service and unique product offerings.