Zale Corp. has abandoned the discounts it turned to in an effort to increase holiday sales (Didn’t work.) and returned to a more traditional promotional selling mode, according to a Thursday report in The Dallas Morning News.
And, the newspaper reports, profits and sales have improved.
For Valentine’s Day, for example, instead of discounting, Zale’s promoted gifts that costs less than $200 and less than $500.
Retail consultant Bob Phibbs has written that discounts don’t always work. Once a product is discounted, Phibbs has said, “the cachet of the product is cheapened.”
Anyone, according to Phibbs, “can be a discount whore; it takes no brains or skill. There is no forethought. No magic or relationship results. And once you do it, you’re often condemned to repeating it.”
While admitting that certain coupons can bring in business, Phibbs cited seven reasons coupons don’t work:
- Coupons are looked at as an ongoing effort. In effect, they become the whole marketing plan.
- By the time you factor in your time creating them, printing them, distributing them and factoring in the actual discounting itself, you have a very expensive promotion.
- You have taught the customer that your product is not worth what you priced it at.
- The people who found you through coupons will wait for your next one.
- You are rewarding people who have no relationship to the success of your business.
- Your sales staff will keep a copy of the coupon to offer to their own customers or friends.
- If your regular customers who have supported you find out someone who’s never been there is getting a better deal than they are, they might not return.
Food for thought for your weekend.