To discount or not to discount? New research from Google and Kantar explores how to strategically balance price and brand to drive sustainable growth this peak season and beyond.

As the peak shopping season picks up pace, cautious optimism is the name of the game. U.K. sales are at their highest since July 2022, with consumer inflation easing and real wage growth returning — retailers have good reason to feel positive. However, while sector demand is a valuable indicator, what ultimately matters is capturing it.

British shoppers might love a good deal, but great value is about more than just price. In today’s competitive landscape, retailers must balance attracting cost-conscious consumers with building long-term brand differentiation.

So, what should retailers be prioritising to stand out? Research by Google and Kantar reveals how a strategic blend of quick wins and long-term initiatives can drive sustainable growth.

1. Think strategically about your short-term goals

Even with spending on the rise, U.K. shoppers are still seeking value. Google Search data shows sustained interest in terms such as “discount” and ”promo code”, indicating a strong desire for deals.

Search term trends for “discount”

This is mirrored in our research: 73% of U.K. shoppers we surveyed say they’re more swayed by price than factors such as brand names — a significant jump from the global average of 61%.

While sales promotions can provide a short-term and powerful boost this peak season, it pays to use them strategically and sparingly. Always manage them against a specific objective (for instance, to gain shelf space, increase brand awareness, or encourage trial) while prioritising your margins and protecting long-term brand value.

Crucially, being top-of-mind during the consumer journey is essential for short-term success. With 73% of U.K. shoppers conducting extensive online research before purchasing, show up and connect with consumers at every stage of the purchase journey.

2. Know your value to optimise pricing

The vast majority of retailers understand they need to balance short-term wins with long-term strategies, but our research shows few are getting it right. One-third of U.K. retailers are outside their pricing sweet spot — either charging too much or not enough. They may be worth more (at least in the mind of the consumer) than their price tag indicates, or they may be perceived as overpriced because people don’t think they justify the premium.

This misalignment between price and perceived value likely reflects the turbulent events of the past few years, from the pandemic to the cost-of-living crisis. But with the market showing signs of stabilising, there’s an opportunity for a reset.

Now is the time for brands to assess their current pricing strategy. Analyse your pricing relative to competitors and, crucially, to customer perception. The aim is to establish — or in many cases, re-establish — a clear value proposition that justifies your price point and sets you apart from the competition.

3. Build long-term loyalty by standing out from the crowd

To build long-term loyalty and stand out in a crowded market, brand differentiation for retailers is paramount. Our research uncovered five key factors that set retailers apart:

1. Be distinct: Does your brand have a distinct look and feel, both overall or in ads, or offer well-designed products and services? This could mean creating a visual identity, crafting a memorable brand voice, or offering products that stand out on the shelf.
2. Be unique: Is your brand specialised in something, or does it offer something unique? For example, do you focus on a niche market, offer exclusive products or services, or provide a unique customer experience?
3. Be advanced: Is your brand leading in digital tech services? Does it harness data to elevate services or experiences? This could involve offering a cutting-edge online shopping experience such as a virtual try-on service, using AI and data to personalise recommendations, or providing innovative in-store technology.
4. Be disruptive: Is your brand shaking up commerce or shopping habits? Is it disrupting things? For instance, you could challenge traditional retail models, introduce new technologies, or offer innovative products or services that change the way people shop.
5. Be purposeful: Does your brand have a purpose? Is it making people’s lives better? This could be supporting social causes, promoting sustainability, or simply offering products or services that enhance consumers’ lives in a meaningful way.

These factors, individually or in combination, can help retailers differentiate their brands. And meaningful differentiation is crucial, because many retailers are failing to achieve it. In our study, which looked at 26 leading U.K. retail brands, only eight were found to have become more distinct over a 12-month period. The remaining majority are, by inference, being sucked into an increasingly crowded playing field.

Unlock growth by building a truly differentiated brand. Retailers that stand out from the crowd can command a price premium, with our research showing that people are willing to pay up to twice as much for them. These brands also attract repeat customers and have a greater chance of sustained growth.

Finding the right balance

Building a brand with sustainable differentiation is a long-term project that requires constant monitoring and adaptation, compared to the quick win of a discount code in a newsletter. But that doesn’t mean price and differentiation are mutually exclusive tactics — success typically requires employing both in parallel.

The key is strategic balance. Short-term price promotions should complement, rather than undermine, your long-term brand differentiation strategy. While frequent or deep discounts can erode perceived value, well-planned promotions can drive sales and acquire new customers without necessarily damaging your brand image. Even established brands with premium positioning can leverage discounts strategically to achieve specific goals, such as rewarding loyalty or driving trial of new products.

As shoppers go online and hit the high street this peak season, it’s the brands that get this careful balance right, built on a nuanced view of value, that will be best placed to achieve success now and in the future.

key takeaways for retailers

1. Embrace strategic promotions for short-term wins. Don’t just slash prices — offer discounts strategically to achieve specific goals, whether that’s driving trials, rewarding loyalty, or clearing inventory.
2. Know your value (and effectively communicate it). Understand your brand’s unique value proposition and ensure your pricing and messaging reflect that value.
3. Differentiate beyond price for long-term growth. Focus on the factors that truly set your brand apart, whether that’s unique products, exceptional customer experience, or a strong brand purpose.

To learn more about the research and insights discussed in this article, watch Kantar's Malcolm Pinkerton in the Accelerate Presents video for a deep dive into the findings.