George Troy, Five Laws of Retail

Are You Tempted by “Going Out of Business” Sales?

Some things seem to always work no matter how trite and transparent they are. Consumers react like Pavlov’s dogs to sales signals very predictably.

I’ve seen some “going out of business” sales last for years. It’s crazy, and it shouldn’t always work, but most often it does. Here are just a few triggers that seem to always elicit a predicable response from customers.


Nowhere is this more true or seen through a clearer lens than in the outlet industry. It has been widely recognize for some time that just because it says “outlet” over the door does not mean special deals are inside.

There are huge, successful outlet malls with dozens, even hundreds, of stores with highly recognizable brands. Many carry exactly the same products as full-price stores and at the same retail prices.

The outlet business channel began back in the sixties in Freeport, Maine. Bass, Hathaway, and other upper-moderate brands that manufactured their product nearby did use their outlet stores to liquidate distressed inventory, last season’s styles, seconds, and overstocks.

But not now. Today’s outlets are huge retail industrial complexes generating billions of dollars in revenue, all based on the simple trigger of “outlet” posted over the doors.

Sales Events 

“Was $____, now  $___.99.” “2-day sale,” and of course the biggest of all, “After Thanksgiving Day Sale” (which often starts two days before Thanksgiving). Retailers sometimes call these phrases “the hook” (a fairly obvious reference to fishing).

Customer training to react to a sale runs very deep. It almost always elicits a response. It’s the original call to action, and it still works.

Don’t Try to Outsmart “The Rule” 

However, that is not even the most important lesson to be learned from this reality. The important thing is not to go against it. 

Retailers cannot violate customer training and still be successful.

A couple of years ago, the geniuses running J. C. Penney tried. Remember? They put the company on an “everyday pricing” strategy. No more sale events. No more calls to action. No more discount coupons. Same low prices every day of the week. Sounds logical—right? It should have worked. But it did not. The entire company got hosed and damn near went completely belly up.

The same thing happened at Restoration Hardware recently. They never had a lot of sales events anyway, and then developed a strategy that was a little more realistic with basically an everyday price position. It did not work for them, either.

The Color of Christmas 

Triggers do not only apply to the language used.

The colors of Christmas are red and green. I have seen fashion retailers try to get artsy and use blue (which kind of works because of Hanukkah, but that’s a shorter-term event). But retailers have also tried pink, and other colors. They invariable fail. Christmas is red and green. Period. Never mess with Santa Claus.

What Are Your Triggers? 

It is helpful to understand what you are doing and why, so you can use them with even better effect. I am sure you can think of more retail triggers. Are there times you have responded to a particular ad or retail “hook” and wished you had not? If you’re a retailer, what triggers have you used? Did they work? Which ones worked better than others?

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