The trend: At a time when many consumers are sharpening their focus on value, a number of premium and mass-market brands are thriving even as they reduce promotions. The strategy aims to protect margins, reinforce premium positioning, and strengthen brand equity while competitors compete primarily on price.

• Victoria’s Secret’s increasingly “surgical,” targeted approach to promotions fueled a 9.2% YoY surge in Q3 sales—its highest quarterly sales gain in more than four years. The change also expanded its adjusted gross margin by 170 basis points and helped narrow its quarterly loss. Early Q4 trends looked strong, prompting the retailer to raise its sales outlook for the second straight quarter.
• Swiss sneaker brand On Holding isn’t offering discounts this holiday season. The brand’s commitment to preserving its premium positioning—intended to differentiate it from markdown-reliant rivals—paid off in Q3 with a 24.9% jump in revenues and a 300% surge in adjusted EPS. The company also raised its full-year guidance for the third straight quarter and now expects 2025 sales to climb 34% YoY on a constant-currency basis.
• Ralph Lauren's strong results in its most recent quarter—17% sales growth, a 43.7% jump in adjusted EPS, and a 12% lift in average unit retail thanks to fewer discounts—drove the brand to boost its revenue outlook to a range of 5% to 7% on a constant basis, up from its prior low- to mid-single-digit guidance.

Why is this happening? With tariffs and other factors squeezing margins, some brands are broadening their value proposition to areas such as quality, experience, and brand connection rather than fighting solely on price.

• Ralph Lauren’s marketing efforts, which include sports partnerships and fashion presentations, for instance, aim to elevate brand perception and underscore product quality and timelessness.
• The strategy extends well beyond fashion. Mediterranean fast-casual chain Cava is also steering clear of discounting, even after cutting its same-store sales outlook due to consumers pulling back on eating out. Cava argues its value proposition is built on high-quality ingredients and an “exceptional” guest experience that warrants an $11 to $13 price point for a bowl full of greens, grains, and chicken.
• Cava’s positioning creates a stark contrast with competitors like Chipotle, which has long touted its strong value proposition of quality ingredients and generous portions but recently turned to free-entrée offers to drive purchases. The split between the two chains demonstrates how some brands are using discounts to boost short-term traffic, while others look to protect long-term equity.

Our take: Pulling back on discounting isn’t without risk, particularly during the holidays when consumers expect steep deals. Even Victoria’s Secret, despite its push to wean consumers off promotions, told investors its holiday discounts will be similar to last year, though it’s raising the spend threshold for gift-with-purchase offers. Brands have good reason for caution; pulling back markdowns too aggressively can push the growing number of value-conscious shoppers straight to lower-priced competitors.