The Serious Hidden Danger Behind The Crazy Discount

It is now in the busy season of autumn and winter clothing sales. It can walk through many shopping malls in Zhengzhou, such as new business mart, Denis, right garden and many other famous brands.

The flag of sale has been raised, and the striking banner of "1~4 fold" and "50 yuan" has dazzled people.

What is surprising is that businesses are not promoting summer products.

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Seasonal goods.

In theory, discount sales are not a magic trick in the department store. But this year, many new features such as "lower prices, earlier clearance hours and wider coverage" have made people wonder: is the retail industry in Zhengzhou in a slump? Is the inventory pressure of garment enterprises increasing?

I saw a piece of news on the Internet that the discount season of major shopping malls in Beijing was nearly one month earlier this year, and the scope of discount products was wider than last year. Besides a lot of backlog stocks, some new and hot sales items also entered the discount category.

The information revealed by some senior executives in the provincial capital also shows that this year, the domestic retail industry has indeed fallen into a downturn, and sales growth of many enterprises is slowing down.

In the post financial crisis era, the downward pressure on macro-economy has been increasing. An indisputable fact that the discount war reflects is that enterprises are generally faced with high inventory risk.

Especially for garment enterprises that constantly catch up with fashion trends, they will quickly devalue once they are out of season and out of date.

However, after a short Carnival of collective discounts, businesses may face more problems.

Too many discount sales will directly lead consumers to develop the habit of "no discount, no buying". Even in the face of heavy discounts, consumers will ask in their minds: will other shopping malls be cheaper? Therefore, when the discount has gradually changed from sales promotion to market normality, its promotional significance has been greatly reduced.

Why are there many companies still choose to "drink poison to quench thirst"? This is because, for many enterprises, under the pressure of high storage, brand image has to be placed on a secondary position. How to digest inventory and obtain capital flow and survive is the primary problem.

Such treatment may not be sensible, but it is a helpless thing.

Many economists believe that behind the peak sales of frenzy discounts, the marginal benefit is decreasing and it is easy to damage the brand image.

At the same time, the long-term discount will bring the gross profit lower and lower. In order to maintain the balance of capital operation and profit, enterprises will inevitably affect the quality of products and services, and the brand will be penny wise and pound foolish.

In the long run,

We must reduce the homogenization competition of products, strengthen the design and innovation ability of products, establish an effective inventory control system, and drive sales with high grade design and R & D, so as to achieve sustainable development.

The fundamental solution to breaking the homogenization quagmire is to enhance the added value of the brand, and to benefit from R & D. The price war will only make the brand image slide.