Is it Time to Discontinue Discounting in Premium Beauty?


Over the past decade, discounting has become more widespread within the premium beauty market. An effective tactic during tough economies certainly but at what cost? And as the economy begins to recover is it time for a new mindset?

Agreed, discounting is an effective way to draw consumers in store, especially during the all-important Christmas period.

In fact it’s already started this week, with Debenhams’ 5-day 25% off discounting bonanza. House of Fraser won’t stretch to 25% off, but is running a 10% off everything campaign from Wednesday to Sunday. Beauty is discounted by 10% in both retailers.

Neither promotion is a surprise to anyone but when the recession first hit retailers were cautious. Debenhams started the ball rolling with its Mega Days in December but as time went on, experimented with different tactics, offering greater discounts earlier and for longer periods.

Even those who first resisted found themselves drawn into the annual discounting battle. John Lewis who has resolutely declined to run store-wide discounts, has continued to match prices when a competitor is running an event.In 2013, discounting is pretty much an all-year round activity. Proven to increase footfall, it’s something that retailers find hard to resist.

The problem is, now that it’s no longer the exception but the norm, consumers have come to expect it and are reluctant to buy at full price unless they absolutely have to. For example, on Soap & Glory’s Facebook page, consumers frequently ask when the next promotion on their favourite products will be on.

Why would you buy at full price when you know there’s a discounting promotion around the corner?

This is a serious problem for premium beauty brands, who spend £millions on nurturing an aspirational image, only to have it devalued when retailers want to slash prices.

Discounting may be good for sales in the short-term, but long-term it damages profits and brand image.So what’s the alternative?

  • Refuse to take part in store discounts, but run attractive GWP promotions during that time. That way, the consumer pays full price for a product and gets something of value for free.

  • Rethink your sampling strategy. Instead of paying consultants to spray passing consumers, arm them with a tray oftesters or samples which they hand out with an offer to come to the counter.

  • Reward loyal fans who shop regularly online. Identify them through the database and appoint them as Brand Ambassadors to trial products which have yet to be launched.

You get the idea. There are many alternatives to straight discounting. It’s about finding the ones that fit your brand.

Traditionally discounting was always a last resort, a knee-jerk reaction when times are tough. Now that we are moving out of the recession, it’s time to look at how to make premium beauty special again.

You’ll find some answers in our recent blogs on:

  • Reducing confusion and clutter at point of sale

  • Building customer loyalty and trust

  • Attracting consumers back into store

  • Getting online to work in synergy with retail

  • Creating distance between premium and masstige

You’ll also find much more in our new report, 10 Years of Premium Beauty, which launches on November 25th. In it, we look at the discounting strategies of the last decade, their effectiveness and recommendations for how premium beauty brands can start weaning customers away from a discounting culture.

For a limited time we are giving you the opportunity to have a sneak peek. You can download your free preview of 10 Years of Premium Beauty here.