How to Maintain Brand Perception While Working With Discount Stores

With the current issues surrounding the costs of living, the discount retail sector is in a position to thrive. Dollarama, for example, reported $145.5 million in profits during Q1, an increase of over 12 per cent from the same time last year. And while the average transaction size dropped by 6.2 per cent, the number of transactions increased by 14.4 per cent.

Brands that haven’t worked with discount stores before are likely considering breaking into the sector now. It seems like an easy way to increase sales. However, there are some important factors to consider before making the move. Namely, how will this impact brand perception?

Here’s what you need to know.

Discounts Stores and Brand Perception

On the one hand, it’s easy to see how selling your products at a discount store can negatively impact brand perception. JCPenney, for example, lost a lot of brand equity when it dropped its sales strategy in 2012 and repositioned as “everyday low pricing.” Customers didn’t want to be seen shopping at a discount store.

On the other hand, things have changed in the last ten years. Consumers are more open to shopping at discount stores now.

In 2013, Dollarama’s annual sales were just under $2 billion. By 2020, that number had doubled. A UK-based study found that 95 per cent of consumers shop at a discount store to some degree.

So, while discount stores offer exciting opportunities for brands, it’s still important to find the right strategy.

Brand Perception Strategy

One strategy is to separate discounted products from your core brand. Have a full-price retail stream and an off-price stream. Many brands have found success using this strategy. In fact, the off-price strategy has been the fasted growing retail segment globally.

Products you sell at discount stores can target different consumer demographics. The key will be maintaining overall brand values across both streams.

Choosing the right partner will help you target the right demographic. After all, not everyone is your customer. Working with a retailer just because they have a lot of traffic can dilute your brand perception.

For example, luxury watchmaker Bedat recently partnered with Reebonz, a discount fashion eCommerce platform. Reebonz’s four million social media followers were the perfect match for Bedat’s off-price strategy.

As a bonus, establishing a base with your off-price strategy can become a pipeline to your full-price products.

We Know Your Sector

Looking to break into discount stores? Marketsupport has your back. Our team of talented professionals will give you national coverage, growing your brand presence across Canada. We offer solutions for merchandising, in-store execution, point of sale, eCommerce, and more.

To learn more call 1-905-847-6513 or visit our new website.

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