Beyond Discounts: Rethinking the Retail Value Proposition

Why Competing on Price Alone is a Losing Game

In the race to win customers, it’s tempting to reach for price cuts first, but deeper discounts, flash sales, and constant markdowns can quickly become the norm. Long term, competing on price compresses margins, trains customers to wait for markdowns, and leaves you vulnerable to any competitor willing to go a few pennies lower. In today’s market, the brands that thrive aren’t the ones with the lowest prices. They’re the ones with the strongest value proposition. And that value comes from more than just numbers on a price tag.

The New Value Equation: Experience, Exclusivity, and Emotional Connection

Customers today aren’t simply buying products; they’re buying experiences, stories, and identities. The “value” they perceive extends beyond what’s in the shopping bag. Three drivers now shape the modern value equation:

• Experience: Every touchpoint, from browsing to checkout, must feel intentional, intuitive, and memorable.

• Exclusivity: Unique offerings give customers something they can’t find anywhere else, elevating the sense of ownership and status.

• Emotional Connection: Shoppers are loyal to brands that align with their values, aspirations, and lifestyle.

When these elements work together, they create a value proposition strong enough to stand on its own without relying on a constant discount cycle.

Alternatives to Discounting

1. Exclusive Collections

Limited editions, designer collaborations, and region-specific assortments add scarcity and intrigue. Customers aren’t just paying for a product. They’re paying for access.

2. Loyalty Perks

Instead of blanket discounts, loyalty programs can offer early access to collections, members-only events, or special services. These benefits make customers feel recognized and valued, rather than just another marketing target.

3. White-Glove Service

Premium service transforms a transaction into a relationship. Think personal stylists, same-day delivery, or in-home consultations. The cost to deliver is often far outweighed by the lifetime value of the customer who feels truly taken care of.

Customer Case Studies: Moving Beyond Price Wars

Nordstrom:

Nordstrom has revamped its loyalty program, offering 5% instant discounts on select Rack purchases, exclusive promotions, and early access to Nordy Club members, who make up nearly 70% of the company’s sales. This goes beyond generic markdowns and reinforces deeper engagement through elevated member value.

Dick’s Sporting Goods:

As a mid-market retailer, Dick’s proved that value creation isn’t just for high-end brands. They invested in seamless curbside pickup early in the pandemic, offering speed, safety, and convenience that won customer trust. They also launched the Sports Matter Giving Truck that delivers sports equipment to underserved youth and builds an emotional connection rooted in community impact. These moves helped Dick’s exceed revenue expectations by about $250 million during one quarter, while deepening loyalty beyond transactional interactions.

Ralph Lauren:

The brand dialed back discounting, refined its core product offering (eg, polos and blazers, elevated store experiences, and selectively limited whole distribution. The result was an impressive 68.8% margin, improved brand prestige, and stronger customer loyalty.

Building Perceived Value That Lasts

Discounts may deliver short-term spikes, but they can’t build lasting brand equity. A differentiated value strategy anchored in experience, exclusivity, and emotional connection not only avoids price wars but also turns customers into loyal advocates. In economic downturns, marketers may tighten, but brands anchored in value are what hold the customer. The leaders of tomorrow won’t just be those with the lowest prices. They’ll be the ones whose customers feel rich in value.

Moving beyond discounts means consistently delivering experiences, exclusivity, and emotional connections, but how do you know if your customers actually feel that value?

That is where A Closer Look comes in. Our mystery shopping programs give you an inside look at the real customer journey, revealing the moments that delight, the gaps that cost you loyalty, and the opportunities to strengthen your brand’s value without relying on price cuts.

If you’re ready to understand exactly how your stores perform where it matters most, schedule a call with us.