Why do retailers offer discounts?

why retailers offer discounts

On the surface, it can seem as though retailers are losing out on money by offering discounts, but in reality, they can boost the business. They can help attract customers as well as provide a reputation boost – as seen with stores that offer an NHS staff discount. Below, we explore why retailers offer these discounts. 

Attracting customers

One of the main reasons why retailers offer discounts is to try and attract new customers. One of the hardest steps to convincing a new customer to try out a new brand is encouraging them to use your product for the first time. By offering a discount it can help nudge new customers in this direction. There are also many consumers who delight in hunting for on-sale items who will be attracted by your discounts.

Re-engaging past customers

In a similar vein, discounts can also help retailers win back past customers. Sometimes a customer won’t use a retailer for a while because there’s no need – they might already have enough clothes, for instance. Or they might have simply forgotten about the brand. But by offering discounts, old customers might try out the retailer again and purchase regularly once more. 

Getting rid of old products

Retailers are always looking for space to house a new range of products and sometimes this means they’ll have to get rid of the existing stock. To do this quickly, they might offer discounts. This can ensure that they sell all of the current stock at a profit while clearing space for their new inventory. One technique that a retailer might use is to move obsolete stock to the front of the store to encourage purchases. 

Drive sales

Discounts can help boost sales and cashflow – something that’s integral to any retailer. Plenty of consumers will spend more than they were originally planning to if they spot good bargains and so sales can be a useful way of gaining unexpected cashflow. If a store has a specific sales target for the year, a well-timed series of discounts can help them push towards this goal too. 

Reputation boost

Discounts can also boost the reputation of a retailer. For a start, it gives the marketing team some simple content for social media accounts. Announcing discounts can certainly spread your online presence. At the same time, if the discounts are offered to certain groups of people – the homeless, elderly, or NHS workers – it can lend credibility to the store for carrying out good deeds. 

Discounts can be helpful for a retailer. They can provide a much-needed reputation boost, help boost sales, and even solve practical issues such as getting rid of old stock.

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