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A well-known retailer who will remain nameless threw a huge promotion. Holiday promos had crushed their targets: record traffic, record orders a wall of green flashing dashboards. But the hangover hit soon after: most of those \u201cnew\u201d customers never came back, and the ones who did only responded to deeper and deeper discounts.<\/p>\n
It\u2019s an all-too-familiar story. Each Q4, retailers flood consumers with \u201c40% off today only!\u201d offers in a frantic sprint to hit year-end numbers. Shoppers chase the steal; brands quietly grind down their margins and train customers to wait for the next code. Marketing teams celebrate the spike in new customers, then months later find themselves explaining why those deal hunters never became loyal, high-value buyers.<\/p>\n
Discounts absolutely move product in the short term. They can clear inventory, acquire new shoppers and juice top line revenue in a reporting period. But they also tend to attract low-value, one-and-done buyers and erode profitability, undermining the real goal: sustainable growth. The question isn\u2019t \u201cDid we win Q4?\u201d It\u2019s \u201cDid we create customers who will still be with us in Q4 next year?\u201d<\/p>\n
The most forward-looking retailers are starting to treat 2026 as the year they break their discount habit. Instead of treating promotions as the primary lever, they\u2019re reclaiming some of that spend and reinvesting it into better experiences: AI-driven recommendations, smarter onsite journeys and measurement that focuses on value created over time, not just clicks won today. They\u2019re shifting from \u201cHow big is the discount?\u201d to \u201cHow strong is the relationship?\u201d<\/p>\n
Loyalty rarely lives at the end of a promo code. It\u2019s built in hundreds of moments where the experience feels intuitive, relevant and respectful of the shopper\u2019s time. Technology should feel like a helpful guide, not a pop-up carnival barker. The retailers that are getting this right are using AI to quietly do the heavy lifting in the background, matching people with the right products, content and offers at the right time without forcing them to work for it.<\/p>\n
Some are already using AI to deliver hyper-relevant contextual recommendations and content at scale. Commerce media ads now reach far more shoppers than they did just a few years ago, turning once-static surfaces into high-intent touch points across the journey. When those touch points are powered by good models, they stop feeling like ads and start feeling like service.<\/p>\n
From the shopper\u2019s vantage point, the label on the tile, whether \u201corganic\u201d or \u201csponsored,\u201d is mostly irrelevant. What matters is whether that tile helps them get to the right product faster. When recommendations land, shoppers convert more easily, return more frequently and trust that the retailer \u201cgets\u201d them. In that world, the most powerful \u201cdiscount\u201d you can offer is actually saved time and reduced frustration.<\/p>\n
This is why many retailers are finding that investing in AI-powered recommendations and ads is a more effective loyalty strategy than endlessly deepening promotions. Discounts keep their place as a scalpel: targeted, purposeful and used where they truly change behavior. Meanwhile, the real engine of growth becomes relevance: showing the right thing to the right person at the right moment, again and again.<\/p>\n
Measurement is evolving in parallel. Just as leading retailers are stepping away from shortsighted discount blasts, they\u2019re also stepping away from narrow, last-click metrics. Instead of judging success purely on immediate conversion, they\u2019re tracking signals of intent and satisfaction \u2014 time to first repeat purchase, cross-category exploration, engagement with high-value content \u2014 and modeling those early behaviors against predicted lifetime value.<\/p>\n
Armed with those models, marketing teams can finally escape the cycle of aggressive discounts and timid bids. They don\u2019t have to overspend on low-quality audiences just because they look cheap on paper. They can invest more confidently in customers and cohorts that show the markers of long-term value, even if their very first purchase doesn\u2019t come with fireworks. Retail media networks that can prove they drive incremental, durable growth, not just attributed sales, will be the ones brands double down on in Q4 and beyond.<\/p>\n
We\u2019re entering a credible-outcomes era. The winners will be the retailers and retail media platforms that can measure and act on the signals tied to sustainable outcomes, and clearly demonstrate their impact in real revenue and repeat behavior. The story that resonates with CFOs will not be \u201cwe discounted more,\u201d but \u201cwe created more value and we can prove it.\u201d<\/p>\n
As the focus shifts from discounting to value creation, everyone stands to benefit. Shoppers get smoother, more satisfying journeys powered by AI-driven recommendations and smarter ad experiences. Retail media advertisers see stronger, more durable performance and higher long-term ROAS, making continued investment feel obvious instead of risky. Retailers gain real, incremental growth instead of exhausting, margin-draining spikes that vanish when the coupons expire.<\/p>\n
So before you greenlight the next sitewide sale, it\u2019s worth pausing to ask a simple question: is this promotion building loyalty, or just buying a momentary bump? The retailers that thrive in 2026 will be the ones that answer that question honestly, and choose, again and again, to invest in loyalty over reflexive discounts.<\/p>\n
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Pat Copeland is the General Manager of <\/em>Moloco Commerce Media<\/em>, where he leads strategic initiatives, product innovation and customer engagement. By leveraging machine learning, analytics and scalable cloud infrastructure, his team supports retail partners \u2014 ranging from major ecommerce platforms to emerging digital marketplaces \u2014 in optimizing their advertising strategies, enhancing customer experiences and maximizing their monetization potential.<\/em><\/p>\n<\/p><\/div>\n