Reasons Your Discount Strategy is Killing Your Fashion Brand

July 23, 2019

Implementing a discount strategy may generate sales and help clear out the stock you’re struggling to sell; however, turning to promotional discounts hurts your brand and bottom line in the long-run.

Here’s how continuously implementing a discount strategy is killing your fashion brand:

1. Brand Devaluation

If you’re aiming to create a premium brand but are constantly selling your products at discounted prices, you’re devaluing your brand.

It’s the exclusivity of a luxury brand that makes it valuable. When you keep cutting your prices, everyone is able to find the product at the lower price, making it unappealing to the consumer segment you were originally targeting.

2. It Trains Customers To Wait For Discounts

The internet has given consumers access to a wealth of resources. They actively research products and retailers before they make a purchase decision.

At certain times of the year, consumers are expecting sales but if you’re discounting prices in between seasons, you’re training your consumers to wait for discounts.

When price-conscious customers know that you regularly slash prices, they’ll wait for products to go on sale instead of purchasing them at their original price.

Brands like Louis Vuitton and Hermes have strict no discount policies which allows them make money in the long-run and maintain exclusivity.

3. It Takes a Toll On Your Margins

Unfortunately, many small fashion brands are run by their creative individuals who have limited knowledge of finances and business. In attempt to clear out their inventory, they copy the actions of large brands and cut their prices. Because big brands produce large numbers of goods, their cost per unit is lower. When they place discounts on their items, their profits aren’t as heavily impacted.

Small brands don’t have the luxury of economies of scale; the cost per unit is higher than those of mass produced goods; therefore, slashing prices takes a toll on their margins and can make them unprofitable.  It is crucial to remember that profits are the goal, rather than sales.

4. It Impacts Consumers’ Perceptions

It’s a fact that consumers associate high prices with better quality. If your products are on sale every other week, your consumers will assume that your  products are worth their sale prices. In a competitive industry, it will become very difficult for you to shake off the “cheap” image once it is placed on you.

Lefty Production Co. is your one stop shop garment and accessories design, development and clothing production company Los Angeles.  We strive to make our clients’ manufacturing experience efficient and cost-effective.  

We offer comprehensive garment manufacturing services in Los Angeles that include sourcing and design, pattern making, garment sample making, laser-cutting, and production of our client’s products.

Contact us at  (323) 515-9266 for more information.

More News