#Explainit: Is relentless discounting a trap for luxury brands' growth?

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As China's Single's Day shopping festival approaches, we are seeing fierce discounting from global luxury beauty brands, such as Estée Lauder, Ralph Lauren, Chow Sang Sang Jewellery, Shanghai Tang, amongst others.

According to Forrester principle analyst Xiaofeng Wang, this year sees new and unusual entrants making their mark on Singles Day. Apple is offering significant discounts on its products, including up to RMB 1,600 off iPhone 16 models, driving RMB 1 billion in sales within the first five minutes of the sale. Luxury beauty brands such as Estée Lauder, La Mer, and SK-II have also adopted deep discounts and extravagant gifts to stay competitive.

Wang also said that promotions started earlier than before for this year’s Double 11 shopping festival, with Alibaba, JD.com, and Pinduoduo launching on October 14, a week earlier than usual. Alibaba kicked off with a RMB 1 billion (US$142 million) promotion, waiving delivery fees for Taobao orders over 99 yuan in Hong Kong, and distributing RMB 2 billion in red packets via Taobao Live. JD.com offered flash sales, free delivery on orders over RMB 9.9, and exclusive discounts for JD PLUS members, while Pinduoduo introduced dynamic pricing and cross-border offers.

The trend of relentless discounting, which has intensified this year, might become more difficult for luxury brands to maintain their allure, according to industry players MARKETING-INTERACTIVE spoke to. Some suggested luxury brands should offer seasonal discounts within their loyalty app, as mobile app users are 40% more driven by discounts and incentives compared to non-app users, according to Emarsys' Customer Loyalty Index 2024 global report.

Beyond massive discounts, what more can luxury brands do to retain customers in the long run?

Check out what they had to say.

Click on each picture to watch a video!

1. Human Lam, market director and client partner, Assembly