‘To discount or not discount’: How to map out a successful sales strategy for 2026

As many retailers ride the tailwinds of Black Friday, Christmas, and the summer holiday spending spike, now is the ideal time to keep the momentum going with a sales strategy that will see you through the next 12 months – not just the next few weeks.

Recent research from Xero shows 41% of Australian small businesses go on sale at least somewhat often throughout the year, with 15% discounting very often. At the same time, only one in seven says the current economic environment has seen a lift in sales (by an average of 17%), while one in three reports sales are down by an average of 21%. 

The key takeaway from this? In 2026, small businesses need to be proactive about discounting; it can’t just be a reflex.

To help you get set up for success, we spoke to some small business owners and a strategy expert on tactics and tools to support your planning and execution.

Set your stance on discounting

For Maddie Begala, founder of Melbourne-based kitchenware brand Pinchy, her decision not to participate in Black Friday was an intentional one. Instead of joining the sales rush, she doubled down on her product and branding.

“We’ve built a range that’s really unique in the market, that’s design-led, and that our customers really love and are constantly buying into,” she says. In the lead-up to Christmas, she dropped six new giftable products instead of slashing prices.

“The value we deliver above sales is the product itself,” she adds, referring to the colourful chopping boards the brand is best known for. “It’s made of an ultra-high molecular weight plastic, so it’s a really durable, chunky chopping board.” For cost-conscious customers, that ‘cost per wear’ mindset helps justify a full-price purchase instead of waiting for a discount.

On the other side of the sales field, premium luggage label July thrives on events like Black Friday. But while it’s part of its playbook, it’s also highly controlled.

“For us, discounting is a brand decision first, and revenue lever second,” says marketing director Ellee Pitman. “As a premium brand, we’re really cautious about training customers to expect sales. Our strategy involves planning eight to 12 weeks out with clear margin thresholds agreed with our finance team upfront. We prefer tiered offers over blanket percentage discounts – things like free personalisation or bundle savings preserve perceived value much better than just slashing 30% off.”

As for which option is best? It all depends on your business’ goals, says Angad Soin, managing director for AU/NZ and chief global strategy officer at Xero. “To discount or not to discount must be a strategic decision, not reacting to short-term pressure and instead building a healthy business all year round,” he says. 

“Discounting offers real opportunities for small businesses to connect with new customers and strengthen loyalty. However, it’s equally important to know your cash flow position so that a sales event is a calculated move that you know you can afford.”

Put your data at the centre of decisions

Beyond philosophy, the mechanics of a good sales strategy come down to your numbers, as Soin suggests. Xero’s research found that outside of promotions, the tactics small businesses rate most highly for attracting and retaining customers year-round are social media engagement (45%) and personalised offers or experiences (33%).

In Pitman’s case, demand planning is a numbers-first exercise: “It starts with looking at prior year sell-through rates by SKU, current inventory positions, and lead times from manufacturing,” she says. “Before big sales events, we model scenarios. If we hit 2x normal demand, do we have stock? If we hit 0.5x, are we stuck with overstock?”

This is a careful balance, Soin says. “Small business owners have to gamble the opportunity of increased sales against the real-world pressures of higher costs and tighter margins, all while protecting their day-to-day cash flow. This is where digital tools are critical.”

He recommends Xero Analytics and inventory integrations like Cin7 as a starting point. With real-time dashboards showing cash flow and performance, and a full view across stock on hand, you can decide which products to promote, which bundles make sense, and how far you can afford to go on discounting.

Invest in loyalty instead of sales spikes

The best sales strategies invest in community and loyalty all year long. For Begala, that starts with a customer and community-led social strategy. She shares recipe content her audience can learn from, responds personally to DMs and emails, and reshares user-generated content – even from “someone making a humble dinner at home” – so customers feel “a part of something, like a community they can belong to”. 

For July, Pitman says customising content to hit different customer categories has been a game-changer.

“Our email personalisation has been a genuine differentiator,” she says. “We’re seeing over 60% open rates on well-segmented flows, which is well above industry benchmarks. Post-sales events, our retention strategy focuses on building relationships, not transactions. Post-purchase flows focus on product education and travel content, not upselling.”

Turn past insights into your 2026 sales map

To turn all of this into a concrete sales strategy for 2026, start by looking back at last year’s peak season – for many, this will be Black Friday to Christmas – through three lenses: your stance on discounting, your numbers, and your customer relationships. Decide where sales events fit (if at all), use tools like Xero Analytics to break down your cash flow and margins in real-time, and then double down on the channels – social, email, in-store – that will actually boost loyalty.

Xero calculated that if consumers switched as much as 10% of their spending from big business to small business, it could mean $76 billion more in the hands of small businesses. A thoughtful 2026 sales strategy – backed by data and the right digital tools – can make sure more of that money ends up with you.

Ready to level up or begin your entrepreneurial journey? Try Xero free for 30 days.