Fewer discounts, more margin: How retailers are rethinking offers

Discounting is getting tighter, and brands cutting prices less often are making more money.

That’s the headline from retail performance data across the UK, US, and Europe right now. The era of sitewide markdowns to clear inventory is fading.

In its place: precision, profitability, and a focus on offers that change what a shopper does, rather than ones that simply get used.

This shift matters because most discounts go to people who would have bought anyway. A smarter discount strategy holds offers back from those buyers and spends them on those who actually move the needle.

The data below shows the market catching up to that idea.

What does a tighter discount strategy look like in practice?

It looks like fewer offers, more carefully targeted, with the margin defended at every step.

ASOS is the clearest example. The retailer reported a 50% jump in H1 2026 EBITDA alongside a 48.5% gross margin, tied directly to cutting discounts and tightening sourcing to reduce surplus stock. That’s the pivot in one line. Fewer markdowns, higher margins, better numbers.

The lesson is not “stop discounting”. It is “stop discounting indiscriminately”. ASOS did not abandon promotions. It got specific about when they earn their place.

How is Black Friday changing the way retailers use offers?

Black Friday has become a precision test rather than a price war.

Retailers are moving away from sitewide cuts toward tiered and bundled offers. The 2025 Ecentric Black Friday Index showed online transaction share dipping slightly, to 9.08% from 9.61% the year before, while in-store share rose to 10.75% from 10.64%.

The takeaway is not online versus offline. It is that the blunt, everything-must-go approach is losing ground to value plays that feel more considered. Bundles. Tiers. Offers built around a moment, not a calendar date.

This is where eCommerce CRO and discount strategy meet. The question to ask of any Black Friday offer is simple: did it change behaviour, or did it just hand a margin to people already filling their shopping cart?

Why are transparency and compliance becoming part of the discount conversation?

Because in Europe, the clearest price is starting to win, and that includes how duties and taxes show up.

Fragmented VAT, duties, and courier networks across European markets make total-price clarity a genuine differentiator. According to Sendcloud’s eCommerce trends analysis, AI shopping agents increasingly favour stores that surface duties and taxes upfront, while new EU handling fees on low-value non-EU parcels are pushing platforms to act as importers of record.

Here is why it connects to discounting. A clean, transparent total price reduces friction at the most fragile point in the journey.

A surprise fee at checkout can undo any offer you led with. Transparency isn’t the opposite of a good deal. It’s part of one.

What does consumer behaviour tell us about discounts in 2026?

Shoppers want deals more than ever, but a deal alone no longer earns loyalty.

The deal-hunting numbers are striking. Netguru’s consumer behaviour research found that 57% of shoppers actively seek the best offers, up 23% year on year; 88% would try a new brand for a good deal; and 57% say they would not have purchased without a coupon.

That last figure is interesting. More than half of these shoppers were genuinely moved by the incentive. They are the buyers for whom a discount is meant. The job of a discount strategy is to find them and skip everyone else.

At the same time, the picture is not uniform. European grocery shows income-based polarisation, with promotion-seeking declining from 44% in 2023 to 37% in 2026, according to McKinsey’s State of Grocery Europe report, while UK private label grows fastest at around 9% a year. And UK internet retail share eased to 27.5% in January 2026 from 28.7% in December 2025.

Two things are true at once. Plenty of shoppers chase deals. Plenty are tired of being trained to wait for one.

A smart strategy serves the first group without spoiling the second.

How do you decide who actually needs a discount?

You read intent before you reach for an offer.

This is the practical core of a smarter discount strategy. Not every shopper needs an incentive. Some are already committed and will convert at full price. Handing them a code just gives margin away. Others are wavering, and a well-timed offer is what tips them.

The way to tell them apart is by their behavior. RevLifter reads more than 40 behavioral signals in real time to predict how likely a shopper is to buy, then decides whether an offer should appear at all. High intent, hold the offer. Genuine hesitation, spend the incentive where it changes the outcome.

This maps cleanly to the work most teams already want to do:

• Recover hesitantly and abandon shoppers without paying off those who were returning anyway.
• Capture more known contacts through better data capture and signup, which works neatly alongside tools like Klaviyo.
• Hook deal-seekers at a margin that still works.
• Grow average order value with offers that make sense in the moment.

It runs across the eCommerce platforms most brands already use, including Shopify and BigCommerce.

How should you measure whether a discount strategy is working?

Measure incrementality, not redemptions.

Conversion rate alone will flatter almost any offer, because it counts buyers who needed no convincing. The honest test uses control groups and holdouts to answer one question: did this offer change behavior?

A coupon that's used looks like a win on the dashboard. A coupon that changed a decision is an actual win. The gap between those two is where margin quietly leaks. Closing it is what separates a smarter discount strategy from a busy one.

The shift is already happening

Fewer discounts. Better targeting. Measured clearly. The closing test is simple: who changed because of the offer?

The market is rewarding precision: stronger margins, less friction, and loyalty built on experience rather than a permanent sale. The final takeaway is simple: fewer discounts, aimed better, measured honestly, and tied to who actually needs an offer.

The brands pulling ahead are the ones that know exactly who needs an offer, and who never did. That is the point: discount less, target better, and keep margin where it belongs.