When will brands quit selling out in seasonal sales?

Some of the smarter luxury brands have become aware of the risks involved in deep and constant discounting, and they have started to adopt a whole new sale strategy.

It’s called the “no-sale” strategy, and it comes down to the core of what brands do best and should never give up doing: selling themselves – preferably at a premium since that is what branding is all about.

When brands sold themselves

Once upon a time, when the world was still an orderly place, consumers were happy to walk into a retailer and have a good, close look at the merchandise. Knowledgeable sales staff lavished them with attention, using finely-honed powers of observation and top-notch people skills.

When the brand story confirmed what the customer already knew, and the two parties had developed a good rapport, the customer might have tried asking for a discount – even though his or her efforts would likely be fruitless. “A discount? I’m sorry sir/madam, this is really the best we can do with a brand of this quality … after all, it pays for itself in the long run …” It was said with a smile and of course, the customer nodded politely and proceeded to the cash register.

We’re speaking of a period – not so distant and arguably not entirely past – when brands were worth something. Retailers were smarter than to give away bits of the hard-earned margin they received on brands they were proud to sell. They knew that brands brought in the punters. A sale? Only when needed to clear out superfluous stock or get ready for a new collection.

Sales were fine as long as they were something special. Because you never knew: people might get used to discounts and start waiting for a sale before they’d come in and buy.

But what has happened to retail in the meantime? Why is it now more the exception than the rule to see a retailer with no ‘sale’ sign in the window? And what has gotten into brands – even many of the most exclusive and coveted – that they are willing to go along with seeing their brand value hollowed out by this carnival of discounts and low-budget opportunities?

Whatever happened to pride?

In this day and age, turnover – any kind of turnover – has skyrocketed. Sell, sell, sell! Now, now, now! Innovation is moving with the speed of lightning; products and services are being refreshed continuously.

Buy a smartphone today and it will be updated tomorrow; by the day after tomorrow, there will be a sale in which the exact same phone you purchased for $600 is now going for $399. Because the brand will be presenting a new model next month. And you feel stuck paying the bill – literally and figuratively.

Sale after sale after sale makes for a race to the bottom in terms of brand value. A great deal of brand value is lost at the rate of one sale per week.

The short-term satisfaction of high sales figures masks the long-term damage incurred by brands that rely on deep and/or constant discounting to achieve them. Discounting makes for happy customers but is ultimately a downward spiral that brands would do best to avoid.

The No-Sale brand movement, as I call it, is fueled by the insight that brands have allowed pride in their exclusive, beautiful, valuable goods and services to slip in favor of faster turnover.

If you’re proud of your brand, you won’t allow it to be sold off at bargain basement prices.

You might hold a sale once in a blue moon – to celebrate the 150th anniversary of the brand, or launch a flagship store on a new continent, or commemorate some groundbreaking event in the history of humanity that underscores your noblest brand values. But not just for the sake of quarterly or even annual sales figures. And certainly, never at such a deep discount that it would be downright offensive to your brand’s heritage.

The mass madness of sale discounts is no place for proud and valued brands.

Fendi, Prada and Hermès have rediscovered their pride and have stopped participating in the international sale madness. And they are not alone. Many newcomers to fashion have abandoned the seasonal turnover concept altogether, focusing on top quality items that work year-round for several years rather than throwaway looks that get trashed at the end of one season. Retailers too are taking a hint: the Antwerp boutique Graanmarkt 13, for example, no longer holds seasonal sales – instead, it organises a twice-yearly second-hand market at which clients and potential customers can donate their top-notch cast-offs and pick up something “new”.

These brands and retailers have returned to their roots: the basic instinct to be proud of what they represent and to protect their brand value as diligently as possible.

They have gone back to being choosy about when and how they treat their loyal customers to something special or try to tempt new audiences with an attractive offer.

High-end brand names, high-end audiences, high-end demand, high-end images – you might ask yourself why in the world they ever decided to hold sales in the first place.

Sale-mania as a counterfeit Walhalla

The whole discount circus that has taken over the retail shopping experience everywhere you look has caused more harm than just damaging brand image and brand value. Knock-off prices and discount promotions have also made it easier for fraud to take root and accelerate the process of degeneration even further.

The worldwide sale phenomenon has prompted many aspiring, status-sensitive consumers to scour the globe in search of a great deal on items from the most reputable brand names in the world. And lo and behold, here is a Louis Vuitton limited edition bag for a price that’s too good to be true.

Of course, you know the old adage – if it looks too good to be true, it probably is. That chance-of-a-lifetime Louis Vuitton bag is guaranteed to be a genuine counterfeit. And that’s not fake news – or, maybe it is – literally.

Over the years, the quality of counterfeit merchandise has improved greatly (you have to hand it to them on that score). The problem is that being offered great brands at a discount in a world where discounts have virtually become the new retail standard will not have overeager consumers questioning the legitimacy of the deal.

The sad reality is that most of the time, it’s the brands that have never participated in anything that even remotely resembles a discount or sale that are counterfeited most. At least they can claim to be among the most coveted brands in the world because the most copied. Cold comfort indeed.

Reputable brands suffer from counterfeiting. Billions of dollars are lost in potential sales of luxury goods, not to mention the damage sustained to trust in brands and retailers and incalculable losses to brand value. And the damage is not limited to luxury brands and their bottom lines: societies suffer when shadowy supply chains, often run by organised crime in inhuman conditions, infect globalised commerce like a virus, eroding economies and undermining governments.

These dark economies are hard to eradicate and are only encouraged by the world’s addiction to slashed prices and discount mayhem.

Brands, take back control!

The thing is, brands don’t need to get themselves into deep discount territory to be successful. On the contrary. For instance: has anyone ever seen an Apple sale? No way will Apple initiate or participate in anything of the kind.

Very exceptionally, someone might have picked up an Apple product at Walmart or Best Buy for slightly better than list price. Apple won’t have liked that very much. It only goes as far as offering a discount for trade-ins or upgrades, aimed at keeping loyal customers loyal.

Tesla has a no-discount policy in place for new vehicles. Apart from an occasional price reduction on selected models, Teslas are sold at list price with no year-end or seasonal discounts. They stand firm, even in periods when they might be sorely tempted to do anything – even make a deal with the devil – to shift their sales figures onto sunnier pastures pronto.

Some luxury brands have outlet stores at which they offer earlier collections or end-of-season stock at slightly more affordable prices than in their mainstream shops. In some way this practice lowers the standard and image of the brand, but it is still a reasonable alternative to crass markdown-ism.

Still, it also hints at overproduction and potential waste, which should give its adherents a reason to stop and think … How about reducing those manufacturing runs or limiting distribution? Maybe a little more targeted marketing is in order – after all, isn’t that exactly the kind of thing that big data is supposed to help us with?

Another way of standing firmly by your coveted brand value is by offering specially selected sets of items, as the cosmetics brand Sephora does. Always, always, as a limited edition that sells out quickly, and with a built-in discount so that there is really no way anyone can get their hands on them for less than the price set by Sephora.

The most daring luxury brand in the no-sale category is also one of the most counterfeited: Louis Vuitton. Its hatred of sales and discounts runs so deep that there are rumors of Vuitton destroying products at the end of each season rather than discounting what has not been sold.

If you are ready to go that far to protect your brand value, I salute you.

Smart discounts count

Protecting brand value starts by thinking away from anything to do with garden variety discount activities or typical retail sale calendar.

To start with, publicly avoiding Black Friday would be a statement in itself.

For many brands, it makes sense to profit from Black Friday – but if this is true for your brand, it might be a good idea to make that the one and only sale you indulge in each year.

Focus on it and make it work for you more than any other sale you can dream up.

Make it a one-time-only thing. Turn it into a loyal customer event. Use it to draw more clients to your reward program.

Let it be known that this is a truly exceptional occurrence: a one-time-only deal on a limited range of merchandise. Come up with a promotional stunt that steals the show from other brands and retailers.

Or use Black Friday to launch a purposeful initiative that will add a lot of goodwill to your brand and take the edge off the ordinary side of seasonal discount offers.

For many brands, and not just in high-end and luxury markets, it is better to think in terms of promotional value than in terms of discount for discount’s sake.

Promotions don’t have to be about discounts. Many successful and reputable brands use promotions more strategically and sparingly.

Imagine a promotion that takes the form of an auction, where goods are sold to benefit a good cause – and the price of the merchandise goes up instead of down, as does the brand’s fund of goodwill and status. Not to mention the profile of the customers such a promotion would be likely to attract.

Throwing discounted merchandise at the greedy consumer hordes may get a brand new customers and new customer date, but it is questionable whether these are the kind of customers the brand really wants: the ones that will elevate its social profile, the ones that share its values, the ones that will engage repeatedly around those core values.

Discounts tend to attract indiscriminate target audiences, who are happy to profit from insane bargains but never again react to any future attempts to reach out and engage. The scatter-shot approach produces just what you might expect: a wildly distributed, unfocused group of useless data points instead of a coherent customer base.

Well-targeted promotions with a whiff of exclusivity will not only attract attention and lift sales for your brand as they should, but the type of new customers who come back for more after the promotion will almost certainly be much more valuable in the long run.

Brand value is all about preserving quality in everything a brand does and communicates.

High-end luxury department stores like Harvey Nichols or Bergdorf Goodman may lower their prices on occasion, but they will never lower their standards.

If brands run promotions with an eye toward the long-term value of the brand, they will avoid the risk of hurting the brand and still increase their power of attraction and profitability.

Choose that instrument wisely

What it comes down to is making a deliberate, long-term strategic choice to protect your brand value at all times.

Making that decision and sticking to it will prevent any markdown-mad marketer inside your organisation from being tempted to come in with something like Crazy Customer Circus or Dapper Dad’s Discount Days.

It’s not the discount itself that makes your brand look cheaper or more ordinary, it’s the way you use the discount or join the sale opportunities.

Discounts and sales are just as much part of the whole brand-building process as anything else. Even well-known brands have been known to wobble a little when it comes to the big sale events like Black Friday or Christmas. Are these so crucial to your annual turnover that they’ve become indispensable? If so, that’s probably a bad sign – unless your brand is in the business of selling diet aids or Christmas ornaments. If not, you may have lost sight of the long-term effects this mass behavior is having on your brand’s value.

Shouting where you would normally be whispering. Cutting prices for everyone to see (and profit from), which will have your loyal, regular customers a wee bit put off: “What’s this then? Why haven’t I been offered this exclusively? Don’t I follow you on Facebook/Instagram/Twitter and read your bloody newsletter?!”

Great marketers will always have their eyes on the prize when it comes to the value of their brand.

They know how delicate any brand’s reputation can be, and how easy it is to make it look cheap and undesirable by making the wrong moves.

There is no money in cheap for brands who aren’t. That is one truth in marketing you should never discount.

Erik Saelens is the founder and executive strategic director of Brandhome