If those discounts are too steep or if they stick around for too long, Kahn said, consumers might start questioning a brand’s value. “But it does seem like it’s not the real price - it’s only here for a special period of time.” “That’s one way to clear out inventory and reduce price,” said Barbara Kahn, a professor of marketing at the Wharton School. Retailers can prevent that by offering promotions that only happen, say, once a year - like a Black Friday sale. “You don’t want to train your customer to continually expect promotions,” she said.
And if they cut prices too often, consumers might stop buying at regular prices, according to Christina Boni at Moody’s. Markdowns aren’t exactly ideal for retailers discounts hurt profit margins at a time when retailers’ costs are rising. But figuring out how much to mark down a product can be tricky. So, retailers have been using steep discounts to try to get rid of all the extra inventory they built up during the pandemic. And since we haven’t been buying as much stuff, retailers have too much inventory. And retailers had trouble securing the inventory they needed to meet demand.īut today, there are zero ships backed up at those ports. A lot has changed in the retail economy since last Thanksgiving. Back then, supply chains were congested - 57 container ships backed up outside the Los Angeles and Long Beach ports.
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