How to Break Coupon and Markdown Culture, Step by Step

Discount culture has intensified over the last several years, due to the amount of competition among pure-play e-commerce and bricks-and-mortar retailers. Suboptimal buying and unrealistic growth targets create a perfect environment for excessive discounting to drive top-line revenue. One of the biggest culprits contributing to excessive discounting is the lack of focus on gross profit within most marketing organizations. Profitable growth is achieved by ensuring all parties are aligned toward gross-profit, not just top-line revenue growth. With the latter, marketers are motivated to discount at whatever levels finance will allow to drive top-line sales. Short-term sales gains create longer-term issues associated with customer lifetime value (creating deal-seeker customers) and erosion of brand equity (brand loses perception of value among high-margin customers). Breaking Coupon Culture Incentives drive behavior among people within retail organizations. Once business KPIs are aligned toward profitable growth, only then can retailers change their approach to discounting. For some, it’s too little too late. J.C. Penney, Lord & Taylor and Bed Bath & Beyond may never be able to evolve beyond their coupon culture. For many, there is still time. The current economic environment has created margin pressure on almost every retailer. Combine excessive discounting with declining sales and an

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