Discounts Have Destroyed Retail

We all love finding a good bargain, but we have taught consumers to expect a deal because somehow they will become loyal. Customers who are bargain hunters have zero loyalty unless everything is always on sale. I saw that firsthand at Macy’s during the one-day sales, where a different group of consumers came into the store. Look at Groupon, a business model built on customer loyalty for merchants who use its site. The model doesn’t work.

It kills me to see the cannabis vendors using discounts to undercut their competitors. There is a time and place to mark down products, as in right before they expire. How can we build a successful foundation when we know we must follow suit to do what everyone else in the market is doing?

I want to believe that consumers are smart. Loyalty is built in other ways, from loyalty points to experiences, to assortment, to discovery, and fun. The cannabis environment is forcing the discounts, and it is definitely not the way to build any of our businesses. Real margins help build real companies. Discounts are not a strategy.