5 Reasons Why You Shouldn't Offer Discounts in Your Retail Store

cutting price with scissors

Price discounting is very popular to most sellers, both online and in physical stores. Shoppers love getting discounts and will rush to any shop that offers the best discount in the market. The big question that most of the retail owners should be asking is if giving a discount is good for their business.

As much as giving discounts can boost your sales, it also comes with a certain risk. The money you are losing in the process of lowering prices can easily be used in other expenditure.

Some of the reasons why you shouldn't offer a discount in your retail store include:

1. You May Be Starting a Price War

two men pulling rope with a dollar sign in the middle

Selling a product by lowering its price means opening your store to a competition from other retail stores. Price wars can easily bring down your store as you might not be able to compete with other more established stores. Continuous price wars will not only lead to lower profit but also to businesses being closed.

2. Price Is Just One Factor in Driving Sales

The attraction and retention of customers is a factor of a number of things. The price of a product is just one of them, but not the determinant. The business needs also:

  1. good customer service
  2. favorable prices
  3. quality products, and
  4. adequate marketing.

All these factors play a part in whether your retail store will meet your expectations in terms of sales. Giving discounts as the only factor to increase sales can easily backfire.

3. Discounts Raise Suspicions

There are many customers who are always very suspicious about the products that have prices lower than the market rate. This shows that giving discounts will not only affect your income, but also drive some customers away.

Customers will always feel that price difference on the same product between two stores can be a sign of one store selling poor quality products. So, there is a possibility that offering discounts can devalue your brand.

4. Most Discount Customers Are Not Loyal

Most customers who frequently ask for a discount are never loyal to the business. Their interest is to get what they want at the lowest possible price. With a slight increase of price, these customers are likely to move to another retail store looking for the same discount you used to give them.

5. Profit Reduction

Most retail store items have very small margins. Offering discounts on these items cuts down your profit by a very big amount. If not checked, this can be the start of financial problems in the business.

In conclusion, offering discounts to customers might be considered ideal for businesses. However, it's important to analyze the long-term impact this could have on your retail store before implementing the initiative.

Interested to know what you can do instead lowering your prices? Read this.