ate in sales events profitably. The key is knowing which products to discount and by how much. Recent evidence suggests that Australian retailers have finally cracked the code. “In 2024, we observed a more strategic approach to discounting during the Black Friday period,” Carla Penn-Kahn, co-founder and CEO of Profit Peak, told Inside Retail. “Retailers were offering smarter discounts, such as sitewide offers and scaled discounting based on margin availability and stock depth/popularity.” Penn-Kahn said that brands also began their sales earlier, a growing trend in recent years. “There was also a noticeable increase in email and SMS marketing in the lead-up to Black Friday and Cyber Monday, with a quieter communication phase during the weekend itself. This shift suggests a more calculated, pre-emptive strategy, rather than an over-reliance on deep discounting,” she said. Clear goals, smart modelling While Penn-Kahn acknowledged the risks of falling into the discount trap, she said there are downsides to sitting on the sidelines of sales events, too. “Customers have become conditioned to wait for sale events before making purchases. If a retailer typically offers discounts but doesn’t provide one during the biggest sale event of the year, they risk disappointing loyal customers and losing potential sales to competitors,” she said. Instead, retailers should account for discounts within their profit margins or focus on a specific outcome that justifies a temporary reduction in profit margins for greater long-term gains. “The most harm occurs when retailers fail to clearly define their goals. These goals can vary widely, from clearing aging inventory to driving new customer acquisition or boosting revenue after a quieter year. Once a goal is set, retailers can model the impact of their discount strategy on gross profit and assess whether it aligns with their objectives,” Penn-Kahn said. “Without a clear goal, however, retailers may discount indiscriminately, over-discounting or attempting too many tactics, rather than focusing on achieving the most important outcome.” In terms of inventory planning, Penn-Kahn said retailers should exclude from sale periods core products, bestsellers, new arrivals, and items with low stock availability or slim margins. This ensures they protect their most valuable products while maximising profitability. She also recommended using customer lifetime value (LTV) modelling to assess the performance of newly acquired customers after the event. “This helps ensure that the cohort is profitable and that the strategies used to convert them into loyal, repeat customers drive higher retention and increased profits,” she said. Five steps to maximise profit Here are five steps Penn-Kahn said retailers should take if they want to maximise their profit ahead of a sales event. Step 1: Set a clear goal for the sale. For example, is it to move aging inventory, reduce customer acquisition cost, increase your customer base, or drive incremental revenue? Step 2: Identify the key performance indicators that will measure whether you have achieved your goal. These might include a reduction in aging inventory, a decrease in cost per acquisition, an increase in new customers, or a rise in revenue. Step 3: Define the discount strategy necessary to achieve your goal and meet the KPIs. For instance, will you discount aging inventory while using a few core products as enticements, or will you offer larger discounts for higher customer spend? Step 4: Establish how you will track performance against the KPIs to ensure you can assess whether you’re on target. Step 5: Document what worked and what didn’t so you’re better prepared for future discounting events. Memory can fail us, so having a record will help improve your strategy moving forward. This story is from Inside Retail’s 2025 Australian Retail Outlook, powered by KPMG. Download the full report here.