When You Should Dodge Discounts

From Apple to Nordstrom to Saturn, some very successful retailers have adopted an "it is what it is" approach to pricing, where price reductions are few and far between. That approach is also working for Lisa Hunter, co-founder of Vian Hunter, an upscale clothing boutique in Palo Alto, California.

"We experimented with [having sales], and no one cared," says Hunter, 42. "We don't want our customers to not buy because the item will be marked down in a few months."

Before you ditch your discount signs, David Urban, marketing professor at Virginia Commonwealth University, says these clues will help you know if this approach might work for you.

• Exclusivity: Vian Hunter designs and exclusively carries its private-label brand, so customers who want its products have to shop there. "[Forgoing sales is] harder to do if you're going head-to-head with bigger stores who can offer the same thing for better prices," says Urban.
  
• Knowledge: Urban says that an independent bookstore might have trouble competing with Borders, but a cookbook store with a staff versed in all things culinary could offer enough value that customers would gladly pay book cover prices.
  
• Longevity: Hunter eschews short-lived trends for more classic styles. A longer shelf life gives customers good reason to pay a bit more, says Urban.
  

Gwen Moran

GWEN MORAN is a freelance writer and co-author of The Complete Idiot's Guide to Business Plans (Alpha, 2010).

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