A retailer I spoke with recently tried going cold turkey on promotions.

Sales tanked. AOV collapsed. And their CEO, who’d presumably signed off on this brave experiment in the first place, absolutely panicked and ordered them straight back to 20% off everything.

Classic withdrawal symptoms from an addiction.

The 150-year-old habit we can’t quit

Promotions are old. Really old. 150 years ago, retailers handed out metal tokens you could redeem for free gifts or money off.

Then came paper vouchers you’d cut out of newspapers with scissors that never worked properly.

Now it’s discount codes and auto-applied offers at checkout.

The delivery mechanism evolved because technology changed. But the thinking behind promotions? Exactly the same.

Quarter’s ending, and you’re not hitting targets? Discount.

Got stock to clear? Discount.

Tuesday? Why not discount?

It’s not a strategy. And it’s expensive.

Why the drug works so well

Promotions work. IMRG pulled a year’s worth of actual analytics data from UK retailers (not survey data where people lie about their behaviour, actual transaction data). And nearly half of all revenue came from discounted products.

The average basket value was higher when discounts were used. People spend more when they think they’re getting a deal. That’s the psychological hook – it’s not just price reduction, it’s the feeling of winning.

Some people will only buy at full price. More people become comfortable as prices drop. But there’s also a chunk of people who just hunt for deals, and if they find one, they buy regardless.

Price economics meets psychology. No wonder retailers keep reaching for the discount button.

The slippery slope nobody sees coming

Here’s how the addiction starts.

Performance dips slightly. Nothing dramatic, just a bit off target. So you offer a small discount. Just this once. Just to get things moving. There’s no harm in it. It’s only 10%.

Conversion improves. AOV goes up. You report the good news to senior leadership, who are delighted.

Next quarter, the same dip happens. Of course it does. You’ve now trained customers to wait for discounts. So you offer another one. Before you know it, you’re stuck in a cycle where every slight wobble gets solved with another discount.

For Radley, we were “the methadone of discount recovery.” They’d gotten themselves hooked on promotions and needed help weaning themselves off without tanking their business.

Because here’s the catch: once you’re addicted, going cold turkey doesn’t work. That retailer who tried it? They proved the point. You can’t just stop when customers have learned to expect it.

The maths

BCG estimated that 30 to 40% of all promotions currently in use are inefficient or unprofitable.

Think about that for a second. Retailers are haemorrhaging margin on discounts they don’t need to offer. People who would’ve bought at full price are getting 20% off because the retailer applied the same blanket discount to everyone.

The classic culprit? The email signup offer. Someone lands on your site, ready to buy. You interrupt them with a pop-up offering 10% off if they hand over their email. They think “brilliant, free money” and use it.

You just paid 10% to acquire a customer who was already buying.

Different drugs for different folks

Not every retailer approaches promotions the same way. Some have a position. TK Maxx, for instance: buy it cheap, sell it fast, drop the price every six weeks until it moves. Brutal, simple, effective. They know exactly what they’re doing.

Waitrose sits at the other end. Premium positioning, careful discounting, and protecting brand value. They’ve thought it through.

Then there’s Temu, which has decided to rewrite the entire rulebook by sending 10 WhatsApp messages a day with 40-50% off everything. It’s discount maximalism as a business strategy.

Exhausting but deliberate.

The dangerous retailers are the ones with no position at all. The ones who randomly discount without ever thinking about what it does to their brand in the long term. They’re the functional addicts who can’t admit they have a problem.

The intelligent alternative

The answer isn’t “never discount.” Some businesses (like TK Maxx) have models built around constant discounting, and it works brilliantly for them.

The solution is knowing who needs a discount and who doesn’t.

Right now, you’re probably showing offers to people who’d buy at full price. And you’re not showing offers to people who genuinely need an incentive to convert. That’s backwards.

Better targeting means figuring out whether this person needs 10% off. Would 5% work? Would free shipping be enough? Or would they have bought anyway, and you’re just burning margin?

It’s the difference between dynamite fishing (blanket discounts for everyone) and using the right bait (intelligent targeting).

The position you need

Here’s the uncomfortable question every retailer should answer: What’s your position on discounts?

“We never discount” is a valid position. “We discount everything all the time” is also valid—if it’s deliberate. “We just use them randomly without thinking” is not a position. It’s a gambling problem.

If you’re already addicted, you can’t quit overnight. But you can start small. Stop showing the welcome pop-up to everyone. Test not offering discounts in specific scenarios. Identify the people who genuinely need them.

Start thinking of promotions as targeted medication, not universal vitamins.

Because 150 years of doing the same thing the same way isn’t tradition. It’s just not thinking.

And retailers can’t afford to think anymore.

This article was written with the assistance of AI.