Discounting has become the villain of modern retail and wholesale.

It’s blamed for eroding brand equity.
It’s blamed for shrinking margins.
It’s blamed for training customers to only buy on promotion.

But in most cases, discounting isn’t the root problem.

It’s the symptom.

When a business relies on heavy discounting to hit revenue targets, clear stock, or stimulate demand, the issue usually started much earlier — in the way it bought and distributed that stock in the first place.

At ProfitPeak, we see this pattern repeatedly. The brands that struggle with margin erosion aren’t “too promotional.” They’re structurally exposed upstream.

Let’s unpack where the real pressure starts.

1. Buying: Margin Is Your Safety Net

When you buy stock, you’re not just buying units.

You’re buying risk.

Risk that demand won’t materialise as forecast.
Risk that competitors will promote aggressively.
Risk that the weather changes.
Risk that consumer confidence dips.
Risk that one channel underperforms.

Your gross margin is the buffer that protects you against those variables.

If your model only works at full price, it’s not resilient — it’s fragile.

Too often, buying decisions are made based on optimistic sell-through assumptions and best-case scenarios. When reality doesn’t match the plan, discounting becomes the only lever left to pull.

But by that point, the damage is already baked in.

The strongest brands don’t avoid discounting altogether. They build margin structures that allow them to trade dynamically. They understand:

• What level of markdown the product can withstand

• How different channels impact blended margin

• What their true break-even point is

• How promotional cadence affects lifetime value
  
  

They buy with optionality built in.

At ProfitPeak, this is where commercial performance really lives — upstream in the decisions that determine whether discounting will hurt or simply help you trade.

2. Brand Positioning: Don’t Train Customers to Wait

There’s a big difference between strategic promotions and permanent deal dependency.

If customers only convert when there’s an offer live, you’re not operating a brand — you’re operating a discount cycle.

And that cycle is hard to break.

Each promotion resets the customer’s reference price. Over time, your “full price” stops being credible. Customers learn to wait. Your forecast becomes skewed toward promotional spikes. Your baseline demand weakens.

The instinctive reaction is often to improve the discount:

• Bigger percentage off

• Longer sale window

• More frequent offers
  
  
  

But that’s not a long-term fix. It accelerates the problem.

The real solution is strengthening brand positioning so that discounting becomes a tactical lever rather than a structural crutch.

When customers perceive differentiated value — product, quality, community, story, service — price becomes one factor, not the only factor.

Without that differentiation, you’re constantly compared to lower-cost alternatives. And if you’re always competing on price, you’re in a race to the bottom.

Profitability doesn’t disappear overnight. It erodes gradually, promotion by promotion.

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3. Distribution: Your Partners Can Destroy Your Pricing

Even with healthy buying and strong brand positioning, poor distribution strategy can unravel everything.

Distribution isn’t just about reach. It’s about control.

A common pattern looks like this:

A brand runs a promotion to drive volume through wholesale or reseller partners. Stock flows into the channel. Targets are hit.

But if that stock doesn’t move at the expected rate, your partners become overstocked.

When cash flow tightens, resellers do what they have to do — they discount.

Often aggressively.

Sometimes below your own DTC price.

The result?

• Inconsistent pricing across channels

• Channel conflict

• Customers waiting for markdowns

• Margin dilution across the ecosystem

• A perception problem that’s difficult to unwind
  
  

What started as a short-term volume play becomes long-term brand damage.

Without visibility into sell-through, inventory ageing, and channel health, discounting spreads beyond your control.

This is where data and commercial discipline matter. When you understand where stock sits, how fast it’s moving, and what true demand looks like, you can protect margin across the network — not just at head office.

Discounting Isn’t Inherently Bad

Let’s be clear: discounting isn’t evil.

It can:

• Unlock cash

• Stimulate demand

• Clear seasonal stock

• Protect liquidity

• Create tactical spikes
  
  

But it only works when the inputs are right.

If your buying strategy leaves no margin buffer…
If your forecasting overestimates demand…
If your distribution creates uncontrolled markdown pressure…

Discounting becomes a profit killer.

And eventually, a brand killer.

Fix the Inputs, Not Just the Offers

When businesses come to ProfitPeak, they often believe the solution lies in “optimising promotions.”

The deeper opportunity is upstream:

• Building margin resilience into buying decisions

• Aligning stock levels to real demand

• Creating channel strategies that protect price integrity

• Using discounting intentionally, not reactively
  
  

Fix the inputs, and discounting becomes a tool.

Ignore them, and it becomes a trap.

The brands that win long term aren’t the ones who never discount, and they’re the ones who can afford to.