It may be a great sales driver for these firms, but that counts for little if it comes at the expense of margins. Even if driving sales is the aim and that aim is achieved, it is a short-term fix with little or no long-term benefits for the stores.
This trend has been going on for the past few years now, but it does not generate loyalty, just a short-term rise in sales. There are some winners, of course - overall food sales did quite well, for example. However, even among this retail sector, promoting on price did not work for everyone.
It is surprising how retailers that under-perform continue to go down the same route. The winners in any sector will always be those who identify new ways of promoting themselves and their products early on and go with it.
Even if retailers didn't want to go wholesale for the traditional sales promotion option, there was room for much more creativity. Perhaps companies could have done more cross-selling and put together bundles of products that complement each other, for example. I also think that multi-channel retailers could do more to bring their entire offer together. For instance, online offers should always be in tune with what is going on in-store.
Essentially, it's back to retail basics. It's about knowing your customer profile and identifying what works for them. Once that has been established, it's about getting them to spend more with you across the entire product base, rather than singling out one area where deals are in place.
Where many retailers go wrong is that they end up with no point of difference from others in the same market. At the end of the day, if store groups understand their shoppers, they can target promotions accordingly. What they should strive to create is customer loyalty, rather than continuing to rely on price cuts."