The Loyalty Dilemma: How Fashion Brands Can Break Free from Discount-Driven Growth

Many fashion brands fall into the trap of relying on discounts to drive sales. While discounting may provide short-term revenue boosts, it can create a negative cycle that’s hard to break. Constant promotions can erode brand value, condition customers to expect perpetual markdowns, and ultimately lead to lower profit margins. Brands that run too many promotions end up struggling to maintain stable cash flow and compete on anything other than price.

So, how can fashion brands break free from this cycle and build a more sustainable, value-driven business model? 

We spoke with Power Digital’s fashion marketing experts—Lilly Fuhrman, Senior Account Director; Hanna Lane, Group Director; and Madison Sternberg, Account Director—who shared their insights on the risks of over-relying on discounts and the strategies brands can implement to foster true customer loyalty.

The Pitfalls of Constant Discounts

Relying on sales to drive purchases creates a transactional relationship with customers rather than a brand connection. “You’re only incentivizing them to purchase based on price,” Fuhrman explains. “There’s no investment in the brand, no reason for them to come back outside of another discount.”

Sternberg adds, “If you’re running sales frequently, you’re telling return customers, ‘This is who we are as a brand now—don’t shop unless there’s a sale.’ Meanwhile, new customers are being introduced to the brand as a promotional one.” 

Transitioning Away from Discounts: A Strategic Approach

Shifting away from a discount-heavy model isn’t easy, and it requires brands to accept some potential short-term performance changes. “When making that transition, brands just have to be okay with a temporary dip in performance,” Sternberg says. “People need time to adjust and realize that sales won’t always be around the corner.”

A phased approach can help mitigate this transition. “Weaning off discounts rather than going cold turkey is key,” Fuhrman advises. “We’ve seen success with brands gradually reducing discount frequency or limiting promotions to clearance items only.” She notes a fashion brand as an example: “It’s been a slow taper-off process over the past year, but the long-term benefits include an increase in Average Order Value (AOV) and more stable revenue streams.”

Timing also plays a role. “Starting in Q1 can be strategic,” Sternberg suggests. “After the heavy promotional period of Q4, customers already expect fewer sales in the new year, making it a natural time to scale back, especially as new Spring collections are launching.”

What to Focus On

If brands are moving away from discounts, what should they lean into? 

The answer lies in customer experience, product quality, and strategic personalization.

1. Audience Strategy & Segmentation
   Lane emphasizes the importance of refining audience strategy. “If you’ve been heavily promotional, that’s what your existing customers expect. You can shift their behavior by segmenting your messaging—acquiring new customers at full price while still strategically targeting sales to return customers.” She adds, “Over time, you can further segment and identify those who buy both full price and on sale, allowing you to tailor promotions to the right audience rather than applying discounts across the board.”

1. Product & Brand Storytelling
   Sternberg stresses the role of product strategy. “The best way to get customers to buy full price is to have a product so compelling that they’re willing to pay full price for it. Whether it’s highlighting quality, compelling design, exclusivity, or limited-edition items, brands need to give customers a reason to shop beyond price.”
2. Personalization & Lifecycle Marketing
   Brands can use data to create personalized experiences rather than relying on blanket discounts. “Targeted email and SMS campaigns, exclusive early access to new collections, and personalized recommendations can drive loyalty without eroding margin,” Fuhrman notes.

The Long-Term Benefits

Transitioning away from discount-driven growth ultimately leads to stronger customer relationships, a more premium brand image, and improved profitability. “The brands that successfully move away from discounts build a loyal customer base that values them beyond just price,” Lane explains.

By focusing on full-price sales, brands can reinvest in quality marketing, better product development, and long-term customer retention strategies. And while some discounting may always be necessary—such as during major holidays—being strategic about when and how often promotions occur can prevent the pitfalls of over-reliance.

If your brand is looking to transition away from a discount-heavy model and build a more sustainable growth strategy, Power Digital can help. Contact us today to learn how we can tailor a strategy that drives loyalty and long-term success.