More and more industries and commercial enterprises are getting into serious difficulties globally or even disappear from the markets, because the cheap price is becoming the sole selling feature.

Department store groups, aside from a very few, are experiencing difficulties, because they don’t possess their own distinct profile and because they act like discounters, even though they incur much higher costs for their stores and services. With cheap private labels they attract customers and thus risk that turnover with classic brands loses more and more in importance. It is rather interesting that the few successful department store groups in Europe, America and Asia are following different strategies, where they produce worlds of experience with big brands, where they service the customer with excellent sales personnel and where every Euro, Dollar or Yen spent already rings in the return of the customer.

The grocery trade has been ailing for years, because it turns over more than fifty percent sales through loss leaders. For instance, most of the time coffee in Germany can only be sold via special-offer pricing. The same applies to beer, confectionary and other products which in general satisfy wants and not so much needs.

Sporting goods retail in Europe is in a serious existential crisis. Winnings, if they can even be called winnings, lie between one to three percent; much too little to create attractive stores and to employ skilled personnel. The consequence is that manufacturer of international mega brands are establishing vertical distribution structures and thus turn into a dangerous competitor for their retail customers. They do not sell via price but at regularly calculated prices and they realize a profit, often in the two-digit range.

Surely the consumer pays attention to price and appreciates a bargain. However, a low price does not lastingly make for more volume. Rather it creates price wars which often end up in a manipulation of quality. For instance, the classic German medium-sized toy retail had to make room for discounters practically all over the country. After these discounters had the market under control, for one thing brands started to perish, because all they had in mind was cheap high volume business. Recently this culminated in the sale of cheap disposable toys which endanger the health of our children. Costly product recalls were the direct consequence.

Jeans for Euro 9.99, Kashmir sweaters for Euro 67 and shoes for Euro 29.90 are just a few examples of pricing current fashion offers.

The press is celebrating the suppliers of such advantageous products as consumer friendly. An absurd error, because now affected textile companies have to initiate product recalls. These types of products often can cause harm to one’s health.

Which measures can be taken in times where the competition has warlike features? How to survive when turnover drops off? These are questions that are posted to us when we caution from the consequences of permanent price-tag marketing. In this context for us it is imperative: Performance ahead of growth. We are opposed to growth that has been bought through pricing. He, who denies the inextricable correlation between a solidly calculated price and adequate quality, is going to catapult himself out of the market in the long run. On top of that he is going to attack the market culture and thus is going to inflict immediate damage to the customer by some means or other.