Afew months ago (and it just happened to be Labor Day Weekend) I went to one of those Big Box clothing and department stores to pick up a pair of shorts to play a round of golf that afternoon. I’m in the retail sales consulting business but when it comes to buying something like a pair of shorts I’m not on assignment. I’m not here to do research. Just get me in, let me get my shorts and get me out of there. The store was running a “huge storewide sale with discounts up to 60%.” That’s nice. I find a pair of shorts. They fit. They feel comfortable. The price tag says $75.00 which is idiotic for a no brand name pair of golf shorts made in China. But they are marked down over 50% to $35.00. I head to the check-out.
“Wow, you saved over 50% today,” says the enthusiastic cashier.
“Yeah, but that’s about what they should have been to begin with. Maybe less.”
“But you get an additional $5.00 Big Box Cash certificate today with your purchase.”
“Thanks. Have a great day.”
Driving to the golf course I think about the psychology of discounting and how it plays out in the smoke and vapor shop industry. Of course there’s a big difference between picking up a pair of shorts for a golf game and shopping at a smoke or vapor shop. First you must realize that men and women often have distinctly different buying motivations. Rarely do you hear a guy say “that vaporizer (or pipe) sure is beautiful color and design.” More often you’ll hear him ask: “how much is this?” But the fact is that both men and women are extremely price sensitive in this post-recession era; it’s usually the key factor in a purchase decision—even before they get to your store.
When you ask consumers about a particular store, they may say something like: “that place is expensive, but they have great products,” or perhaps it’s “inexpensive but they have low quality products and limited inventory.” Whatever the customers’ impression, pricing is often part of the store description. So it’s important to remember that pricing plays a key role in a customer’s perception of your business and their decision about where to buy.
Now what about discounting or running a store-wide sale event to move older inventory? How does that fit into your pricing policy. Or does it? Some older, well established, high end stores absolutely, positively will never run a sale “because that’s not who we are.” Discounting doesn’t fit with their store character and persona. Their thinking is that they cater to the wealthier clients who expect quality and service and might somehow be insulted by a storewide sale. Nonsense–that’s store ego at play. Even (or perhaps especially) affluent Americans like a bargain. Who doesn’t appreciate the opportunity to save money? Furthermore when a store that does not normally run sales does run one, it’s usually effective. It’s all in the position, marketing and message of the event. Conversely, an independent smoke shop whose pricing mirrors the Big Box everyday discount chain could have a difficult time creating excitement and additional traffic if they are known to be habitual discounters.
A storewide sale event can be effective, but it better have a theme and a discount strategy. Now and then I run into an owner who claims to have run a storewide sale. How did you advertise the sale? “Oh, we really didn’t advertise.” What was your discount and pricing strategy? “Oh, we really didn’t discount much.” And then they wonder why the “sale” didn’t do well.
Before you step out there and decide to run a sale, think through the reason for the sale. Clearance sales, holiday, anniversary, and trade liquidation sales are just a few of the themes that are typically used in the industry. Again, the success of these special sale events is impacted by a store’s standard pricing policy , margins and price point: these factors tie into a store’s target customer and demographics.
This brings up a final; point: successful retailers are better adept at identifying the true market value of the products they sell during the normal course of business (without a sale event). They understand that there are customers who will pay more, customers who may pay more at certain times, and customers who will never pay more. Consider also, there are things you can do to de-rail comparison and price shopping.
◆ Try to get exclusives. This avoids your store being shopped on a price only basis. Ask your vendors about an exclusivity deal based on geography or time (three months is suggested).
◆ Make sure you have a wide selection of merchandise that covers all price points, even when are not running a sale.
◆ If you don’t want to run a store wide sale and you have a mailing list (and I really hope you do) invite your regular customers into an open house for a private sale event and offer them 20% or more off their purchases during a particular weekend or week.
◆ Keep your sale items toward the back of the store. Force your customer to search for them. Tempt them with your regular priced items before they see the marked down items.
◆ Offer free services to your valued customers, such free glass cleaning or a free battery if they buy a particular vaporizer.
It’s critical to determine the right pricing strategy for your business and how a sale event might fit into your overall business plan. Successful jewelers understand there’s a time and place for a store-wide sale event that’s advertised and includes a discounting strategy which will attract both new and existing customers. SSA
About the Author:
Bob Epstein is CEO of Silverman Consultants, LLC. Silverman Consultants provides guidance to retail store owners seeking to turn around a business, sell off unwanted inventory, or liquidate an entire store. With offices located in Charleston, South Carolina; New York, New York; and Saskatoon, Canada; the company helps retail store owners and chains formulate strategies designed to maximize revenue in times of transition, whether due to retirement, store closing, or simply when needing a boost in sales. For more information, visit www.silvermanconsultants.com or call Bob direct at 1-800-347-1500.