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By Tony DeMasi, editor
t’s Christmas shopping time! Hopefully, more shoppers than ever will
come through your door and become customers. Some will shop strictly
for bargains, some won’t. You’ll have to serve both groups — but you
also have to make a profit. Keep that in mind.
Bargain shoppers are just that — they want bargains. That doesn’t mean sale
prices. If you do smart buying then there’s no reason to quickly discount your
regular prices. Take advantage of special deals from vendors and pass at least
part of the savings on to your customers. But do so while announcing in signage
the full retail value of the item.
Where do you find such bargains? Everywhere! Every vendor has closeouts.
Every market center showroom has discontinued lines or items. They have to
get rid of that merchandise. You can probably get it for at least half off of wholesale
— that is 75% off suggested retail. Then, sell it to customers at half off
retail. You’ve doubled your money and they saved half of theirs. It’s the best of
all deals.
Despite new headlines about the economy being strong and a glut of luxury
consumers, income has nothing to do with the way people shop. No matter
if your customer is on a limited or unlimited budget, everyone likes a good
value. So, give customers want they want… without you giving up your profit.
Here Are Other Points to Keep in Mind:
1. Price-based promotions are here to stay.
2. Shopping malls are not perceived to offer value in the consumer’s mind.
Your location might have a negative effect on your business.
3. Consumers are willing to “out wait” retailers to get the sales. So, if you have
to, put discount prices on the “good stuff” at the last minute. Full-priced merchandise
that is not selling after a few weeks on display should be discounted
just to get it out of the way.
Here Are Some Tips from Other Marketing Experts:
Madison Riley, a retail strategist at Kurt Salmon Associates, told USA Today,
“There's no question we (consumers) are programmed to search and hunt for
bargains” and “the competitive dynamics are so high, you (retailers) have to do
all you can to minimize markdowns.”
Christine Chen, a retail analyst with Pacific Growth Equities: “Department
stores would do the markdowns to draw people into stores, but now it feels like
they’re always having a one-day sale ... and it doesn’t even feel special anymore.”
The discounting does “create traffic, but it trains the customer to expect the sale
and not want to pay full price.” She added that some retailers plan lean inventories
to avoid having to put a lot of merchandise on sale.
Terry Lundgren, CEO of Federated Department Stores, the parent of
Macy’s and Bloomingdale’s: “We’re getting down to the sale price. You don’t
have to wait for it to go on sale.” The company has focused on running fewer
but more special markdown events.
Abercrombie & Fitch limits markdowns. It now runs sales at the end of
each quarter to help retrain customers away from expecting the sale du jour.
Ken Grady, president of K.A. Grady PC:
Nowadays, many retailers start high knowing they will
mark down. That strategy has many negative consequences.
The better strategy is to start at the right
price, but refresh inventory frequently to drive customer
interest (and, of course, sell what the customer
wants to buy.) Some retailers start down this path, but
then quarterly financial reporting catches up with
them and they get back on the promotion train to
boost sales. Those retailers not under the glare of
quarterly reporting may have the best chance to
implement a strategy of fair prices and frequent inventory
refreshment.
Russell Jones, Director, Alix Partners LLC : The
only true solution is for retailers to stop the greed and
walk away from potential missed unit sales. If stores
reduce inventory levels, they will inevitably increase
the immediate demand for the item. Of course, occasional
promotions are something that will never go
away, but I agree that they should be much less often
and much more “special.” Retailers that use frequent
promotional and markdown pricing make it difficult
for their customers to know whether they are getting
a fair and honest price. If promotions are needed to
drive traffic, they need to be focused (small number of
items), meaningful (#18 on the consumer list), and
evaluated for effectiveness.
Take Advantage of Show Specials!
Show season is coming up again. Many vendors will
offer show specials. Take advantage of them! You may
not be able to use the product right away, and the vendor
may not be able to ship it right away, but if you
work out shipping and dating arrangements with the
vendor, the merchandise is yours at a special price.
Never let a money-making opportunity go by.
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