Surely, customers nowadays expect rebates and special pricing. There are more and more kinds of consumer goods that can only be sold via cheap pricing. For instance, in Germany, coffee roasters have maneuvered themselves into an offside situation, even though there are only five large and noteworthy companies on the market. Housewives can buy top quality coffee at 25 % off nearly every week of the year. And that even though raw-coffee prices have been rising steadily for the past few months. Skis of the big four manufacturers can only be sold via rebates of up to 50% off. Fashion is sold at 25% off four weeks after arrival of the newest collection. Household appliances and electronics have become 30% cheaper in most markets over the last 12 months. If you buy a car and do not lease, you buy first of all the rebate and the interior equipment at a discount.

Who do these rebate battles serve? We think nobody. When retail speaks of rising sales volume and of the fact that rebate buyers simply buy more and as such also spend the money that was actually saved by the rebate, then they are overlooking the fact that medium term and long term customer confidence is lost through such actions. How should a customer view prices which are constantly reduced at their original level as solid and legitimate? Retail creates mistrust among customers through these constant rebate actions.

Rebate battles unsettle and in the end they lead to buying resistance. Dwindling service, missing consultation, poorly trained personnel and long lines at the cash registers are things customers experience daily and they make the shopping experience little attractive and ultimately the trust into the guarantee of quality is lost. The variety of offers gets lost, delivery times arise and often retailers recoup the money lost through rebates via overpriced products which are not part of the bargain offers.

In the classic rebate markets USA and Germany retail is hardly earning any profits. Bankruptcies, closings and mergers are on the agenda almost daily. Despite assertions to the contrary, customers foot the bill. The industry laments the purchasing conditions of retailers which are predatory in nature, especially, when it comes to products with brands as performance guarantee. This creates a loss in the confidence consumers put into a brand and thus into the brands products. A German economic newspaper wrote in this connection that dealings with these percentages are expensive deals. Retail is throwing caution to the wind when it comes to warnings that at the end of such actions you always encounter a crisis of confidence and that this crisis might already be upon us.

Industry should take appropriate measures in order to bring about a change on behalf of the customers. Selective distribution on the part of the industry towards specifically chosen and responsible retailers who curb this type of aggressive rebate policy, is required. Of course, there is always the chance of utilizing the advantages of low priced buying, clearance, the sale of second season or other reduced goods. Or one could also sell at reduced prices via cost-saving distribution channels such as factory outlet stores and let the customer partake. However, such occasions and situations need to stay visibly an exception. Such conduct is in general appreciated by customers.

Selective distribution strategies require consequent behavior and a lot of discipline on the part of the industry. It is often required to put up with momentarily stagnating or regressive sales figures. But it pays, for all market participants.