In Australia, the Black Friday and Cyber Monday weekend has swiftly become the starting line for the Christmas sales season. In years gone by, especially recently with a cost-of-living squeeze, brands have rushed to offer big discounts on a wide variety of products to entice customers to part with their cash and boost revenues.

This year, however, marked a change in the way retailers approached Black Friday and Cyber Monday — and the way in which consumers behaved. With surprising results, I may add.

One might be forgiven for thinking that the brands that simply offered the biggest discounts saw the biggest sales boosts. But Klaviyo’s data is in, and it shows that brand loyalty and small discounts in the 10%–15% and 20%–25% ranges were much more effective in driving sales than big blanket price slashes.

In short, it seems that this year, consumers have been waiting for the right message about the right product from the right brand rather than looking for the biggest discount.

Why blanket discounting is a bad idea

So, while slashing prices across the board may seem like a good way to fill carts ahead of Christmas, the reality is that it’s unlikely to work. And even if it does, filling carts by slashing prices means cutting directly into profits — a hit many retailers simply can’t afford. Retail profitability may be showing some signs of recovering slightly now, but it wasn’t long ago that insolvencies had doubled in the space of just two years.

If you needed more convincing, here are two more reasons why blanket discounting is a bad idea ahead of Christmas.

First, it conditions customers to wait for sales instead of purchasing at full price, gradually eroding the perceived product (or worse, brand) value. Some retail experts call this the “Ralph Lauren effect”. The well-known luxury clothing brand offers so many sales throughout the year that customers only have to wait a few weeks or months before what they want to buy gets a price cut.

Secondly, and most damaging of all, many retailers fail to recognise that their most loyal customers are often willing to pay full price. Offering unnecessary discounts to these customers means missing opportunities to maximise revenue from your strongest supporters.

Why smart targeting is the new approach to discounting

If you’re able to segment your customers into different behavioural groups, you can target small discounts at specific groups where it makes most sense. First-time buyers, lapsed customers and those who abandon carts are the groups most likely to respond to discounts and convert into sales without cutting too much into profits. Meanwhile, you can reward loyal customers in ways that don’t involve price cuts (and profit hits), such as early access to new products, faster shipping or personalised perks.

Incu is just one example of a brand that understood the importance of brand loyalty and selective discounting this Black Friday. The luxury men and women’s fashion brand reduced the variety of products on offer this year and reduced the discount level itself (from 40% last year to 30% this year). The move resulted in a higher portion of sales on its full-priced items compared to last year, as loyal consumers were waiting to spend more on Black Friday anyway – especially in store.

A zero-discount policy works too

Of course, there are brands that believe discounting is never for them in any circumstances. An example of a retailer that never discounts is Merry People. The company’s founder Dani Pearce believes discounting devalues the product and brand, and annoys people who purchase at full price only days or weeks before a price cut. This Black Friday, Merry People continued its long tradition of not discounting anything and saw a sales uplift on Black Friday.

So, my advice to retailers this Christmas is to think carefully about their approach to discounting. By analysing customer data, refining timing and emphasising value over indiscriminate price cuts, businesses can protect their profits while still delivering a compelling holiday experience.

It’s also worth remembering that not every holiday incentive needs to be a discount. Retailers can offer value in other ways, such as free shipping, exclusive bundles or loyalty programs providing a sense of reward without cutting into margins. These strategies enable brands to differentiate themselves from competitors and build stronger customer relationships while preserving profitability.

As the pressures of rising costs and insolvencies continue to mount, retailers must move beyond outdated playbooks and embrace a strategy built for survival and growth. By being strategic, retailers can turn the season into an opportunity for both immediate success and steady profitability.

After all, what’s the point of holiday cheer if it comes at the expense of retailers’ future?

Robin Marchant is senior marketing director for Asia Pacific at Klaviyo.