Don't fear the discount

When is a deal not a good deal? Apparently, when it is reported in the UK media. When reading that Amazon is closing its “grab and go” grocery venture out of Britain by shuttering its 19 remaining Amazon Fresh shops, I was struck by the language used in one national newspaper, which described the introduction of a “desperate” £1 meal deal when reporting on the online business’s previous struggles with its bricks-and-mortar concept. 

This comes hot on the heels of the well-covered and highly-analysed news that Pret A Manger will trial the meal deal format after the value of the chain was written down by a third, despite its previous chief executing once saying, “We will never, ever do a meal deal – it devalues the product”. 

Does this make the meal deal the flare signal of a sinking ship? Or do we need to reconsider how we think about discounts, incentives, and value from a broader perspective?

I lean towards the latter. Perhaps this is because I went to university in a small town that saw the meal deal sections of Tescos and Boots cleared out on a regular basis. (Tescos had better sandwiches, but with Boots you could get an Innocent smoothie. Tricky, very tricky.) But I think there is an argument that says we are too quick to stigmatise a bargain.

We seem to have a cultural suspicion of anything that looks “too cheap”. A landlord offering rent-free periods is accused of desperation, while a listed company trading at a discount to NAV must fundamentally have something wrong with it. This interpretation neglects the fact that landlords offering upfront incentives may create stickier tenancies, reduce costly void periods and improve tenant quality, or that buying a company or trust at a discount can give investors a margin of safety and higher prospective returns. In a period of food inflation, a meal deal will broaden the demographic of customer that comes through Pret’s doors.

Economically, discounts are what keep the system moving. They allow price discrimination, ensuring products and assets find a market. They help smooth cycles, bridging moments of weak demand. And they protect longer-term cash flows by encouraging uptake when it matters most.

The real danger lies not in discounts themselves, but in the cultural reflex to see them only as red flags. That reflex can blind us to opportunity. A discount can just as easily be a sign of strength — of adaptability, strategic thinking, and long-term vision – as a sign of weakness.