The unknown law of retail (part 1 - the problem)
Retail is plagued by discounting, and the reason for that is because retailers have ignored the paradoxical Law of More.
The more roads you build, the more cars you have, because you incentivise car travel.
The more you reward participation, the more you get ‘mere participation’ because you devalue winning.
The more sterile your environment, the more susceptible you are to disease, because we ‘incentivise’ the powerful bugs.
Is there a pattern there?
Consider for instance education: By making more education freely accessible, it has become worthless.
Internet tycoons promote dropping out of college is not a sign of a society’s successful valuing education. Homeschooling is growing. STEM education is struggling while the intellectual equivalent of flower-arranging classes flourishes. We are actually getting dumber. Literacy rates are declining. (Google the previous sentence to find some stories. Though difficult to quantify definitively, educational progress has stalled at least, despite it being freely available in most civilised countries.)
The intention is that more education would lead to more educated people. But the paradoxical impact of the law of more, is that the more education you make freely available, the more diluted it becomes.
Retailers have been living on a diet of discounts as the default strategy for a long time. The intention is to make people aware of the value of the offer, but paradoxically they have become immune to it.
Traditional thinking was that discounts were common so people got used to expecting it, but in fact discounts became so common people can’t recognise them. We encouraged consumers to become less discerning.
We incentivised cheapskates, so we got cheapskates.
There is a fix, and I will write about next time.