harmful effects of discounting your brand

In today's highly competitive fashion market, discounting product is a common strategy used by many brands in order to attract customers, clear out excess inventory, and boost short-term sales.

However, while the immediate benefits of this approach may seem attractive & effective, the long term consequences can be detrimental to a brand's perceived value & image, financial health, and sustainability efforts.

In this article we discuss a few of the negative side effects of discounting your line.

Erosion of Perceived Brand Value & Image

One of the most significant impacts of consistent discounting is the erosion of perceived brand value.

When your target consumers become accustomed to frequent sales and discounts, the perceived value of the brand diminishes.

High-end and premium brands rely on an image of quality & exclusivity, regularly slashing prices tarnishes this image, making the brand seem less prestigious (even if the product quality is high).

This can lead to a loss of attraction towards your brand, as consumers start to associate the brand with lower quality and reduced desirability.

Training Customers to Wait for Discounts

Frequent discounting conditions customers to wait for sales rather than purchasing items at full price, this practice disrupts the natural sale cycle, leading to uneven revenue streams & irregularly selling product at it’s proposed price point.

Customers who wait for discounts also tend to become more price sensitive, further decreasing the likelihood of them purchasing products at full price in the future.

This cycle creates a race to the bottom of the fast fashion pit, where the focus shifts from product quality and brand identity to simply competing with large scale retailers to offer the lowest price.

There is no space in the industry for startup brands to compete with these massive retailers, as they own manufacturing chains & will certainly beat your sale price point.

Focus on quality & stand behind it with a calculated price point which can sustain your brand growth.

Financial Burden

Relying on discounts to drive sales can lead to significant financial loss.

The reduced profit margins from discounted sales may not even cover the costs of production, let alone marketing and operations, particularly for brands which do not have significant scale.

In short time, this will erode profitability, stunt cash flow, and make it challenging to invest in new product development, marketing, and other critical areas of growth.

Environmental Impact

The clothing production industry is notorious for its environmental footprint, and discounting product only adds to the problem.

To meet the demand for frequent sales and new collections, brands will often produce more than necessary, leading to excess inventory.

The overstock will often end up in landfills or be incinerated, contributing to environmental pollution.

Furthermore, the fast fashion model promoted by frequent discounting encourages a throwaway culture where clothing is viewed as disposable rather than durable, valuable & long lasting. This contributes to the growing problem of textile waste.

Compromising Garment Quality

To maintain profit margins while offering lower prices, brands will almost always compromise on the quality of materials used as well as the production processes.

This will lead to a decline in product quality, negatively affecting customer satisfaction and brand reputation.

Additionally, the pressure to reduce costs can result in unethical labor practices, as brands often turn to cheaper, exploitative labor sources to maintain low cost.

This not only harms human workers, but also risks your brand reputation.

Strategic Alternatives

There are several alternative & effective strategies your brand can implement while avoiding these damaging effects, such as :

1. Limited Collections : Releasing limited collections can create a sense of urgency and exclusivity, encouraging customers to purchase at full price.

2. Loyalty Programs : Rewarding loyal customers with exclusive offers, early access to new collections, and other perks can foster a sense of community and encourage repeat purchases.

3. Value Added Offers : Offering services such as custom tailoring & styling, hosting community events, or special offerings for loyal customers such as birthday discounts can enhance the perceived value of the brand, as well as build a stronger community.

4. Sustainability Practices : Emphasizing sustainability and ethical production can attract the growing population of conscious consumers willing to pay a premium for responsibly made products.

This adds a significant credential to your perceived brand value & image.

Conclusion

While discounting clothing can provide a short term boost in sales, the long-term effects can be negatively detrimental to almost every aspect of a brand.

Brands need to carefully consider these impacts and implement alternative strategies to maintain their competitiveness, quality & reputation without compromising their core values.

By focusing on quality, reputation, strong marketing and ethical practices, brands can build a loyal community and achieve sustainable growth.

Disclaimer : this is not business advice, only reiteration of our research & experience working with brands. Use information at your own discretion.