Today, too many are over-stored and under-differentiated. That leaves most leaning too heavily on the "sale!" sign to drive traffic. Markdowns are coming earlier and earlier. In some regions of the world, Christmas discounting begins in autumn. Bathing suits are marked down by spring. Instead of addressing the more fundamental issue"” how to get the right product for the right customer before competitors do"”retailers have entered a frenzied race to discount merchandise before their competitors in hopes of making their numbers.
Racing toward markdowns is a losing game. Customers become inured to incessant reductions and promotions lose their impact, or customers become addicted to them so that they won't purchase until price points fall. Retailers lose out on margin as merchandise is discounted before high-demand periods. In the bargain, they diminish their brand value in the eyes of their most prized customers as they unwittingly position themselves as "second rate" or "bargain basement."
To win in what is arguably the toughest environment the industry has ever faced, retailers need to sharpen their ability to innovate, offering products and assortments that stand out from the crowd"”and doing so much faster and more efficiently than competitors.
