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Discounting Jewelry Hurts More Than it Helps
Jewelry is one of the most in-demand luxury products in the world right now, and still, jewelry remains one of the most heavily discounted retail categories.
Even at less hectic, discount-driven times of year, it's not uncommon to see retailers offering deep discounts on jewelry. It doesn’t seem like a bad idea at first glance; discounts, the conventional wisdom goes, can bring in new customers, clear out some space on the shelves, and create positive feelings about your brand. But the reality is that discounting is sending all the wrong messages to consumers and hurting both your profits, your brand, and the industry as a whole in the long run.
How Discounting Hurts Your Business
The first problem with discounts is that they attract the wrong type of customer. You might experience an increase in foot traffic when advertising discounts, and you might make some additional sales, but discounts do nothing to encourage brand loyalty. Discounts tend to attract the type of customer who is interested in the lowest price above all other considerations. It’s no different from subscription services that offer a free month or publishers that give away ebooks for free: for the most part, you’re not attracting people who are going to fall in love with your products and be there for you year after year but people who like free stuff. They’ll move on when the stuff isn’t free or cheap anymore and find someone else who’s giving away free or cheap stuff.
In addition to the loyalty issue, discounts send a number of negative messages to customers that could leave them questioning your business practices. If they can sell this item for 70% off, our hypothetical customer is thinking, does that mean the regular price is 70% too expensive? Do they not know how much their merchandise is worth, or do they think we’re stupid and they can get away with charging us more the rest of the time? When the item returns to its regular price, am I going to have to haggle for a discount? Why is this retailer so desperate for sales?
This hypothetical customer might not be completely out of line in thinking this way. Since jewelry does not typically have a reference price, there’s no way for the consumer to know exactly what kind of deal they’re getting. In 2015, J.C. Penney paid $50 million to settle a class-action lawsuit for deceptive discounting practices, while Kohl’s faced a similar suit for advertising items at a discount when the items had never been sold at their reported “full” price.
Discounts train customers to chase after the lowest price rather than to seek value. Just as you train your staff to sell in a certain way, your prices train customers to expect a discount. It takes some time, but both staff and customers can learn that the number on the price tag is exactly what the item is worth.
Instead of Lowering Prices, Add Value
In order to convince a customer that the item is worth what you’re charging for it, it’s important to add value. This is where having a well-trained sales staff is important. They have to do the work to find out from the customer what’s important to them and then focus on that reason. Understand what a customer’s dreams are, and show them how this product will make them come true. Understanding their values helps in this regard, as well. Consumers are becoming increasingly socially conscious and will seek out products that are ethically sourced and produced in an environmentally friendly manner. More generally, offering courteous and expert service adds value to any product. Having a clear idea of who your ideal customer is and meeting them at every step of the buyer’s journey goes a long way to adding value, as well.
But this isn’t to say that you should never discount. Discounting is a legitimate and effective method for clearing out old stock. The key is to be honest with the customer about your reasons for discounting inventory. Honesty builds your credibility, the foundation of any relationship. And that’s what it’s all about: not making a quick sale, but building a lasting relationship with a customer based on selling quality merchandise at a fair price, a transaction in which both parties are satisfied.