Some Thoughts on Discounting

I visited a car dealer this weekend since we have finally decided that our 10 year old convertible is no longer up to winter driving.  (Actually, it never was but those sunny summer days with the top down made up for it.)  As we entered the showroom, the cars all had “Car Show Special Deals” painted on the windshields.  After meeting a salesman, one of the first things he said was “You won’t believe the discounts my boss is giving”.  Frankly, I hadn’t really intended to get down to pricing, but with all the promises of discounts I just had to see how low they would go.

So, what role does discounting play in our businesses?  Can it get people to spend with you rather than someone else?  Can it at least get people in to your store?  Can it make customers buy more?

On the one hand (we always had a joke at our law firm that our clients would like a one-armed attorney so he/she wouldn’t be able to use that term), the writer in the this article argues that you should avoid discounting and gives five ways to help do it.

On the other hand, one of our most successful vacuum retailers has a flashing sign outside his store which says “50% off vacuum cleaners”.  He takes the customers to the back room, shows them hundreds of his trade-ins and tells them he will sell any of them for 50% off the regular price.  He says store traffic is great.  The best part is that when he answers why he has so many trade-ins, he explains that people are buying vacuums made to last and he then shows them a demo of his Missouri-Made vacuums.

Many sewing machine retailers use product bundles to create value for the customer rather than discounting individual products.  (The availability of financing becomes important to support the sizeable cost of these bundles.)  Oreck has always used free products to support the high price of vacuum itself. 

In this economy and thanks to our depressing media, people are expecting retailers to have to discount.  I think we all must be prepared to have some answer to the question “Do you have any specials?” or “Can you come off of that price?”. Building value in the offering is essential, but today is it enough?

Good selling!

Bill Hinderer

 

Comments

[Melissa]

Another way of discounting sales is auctioning off your gift cards? You get the money up front and increase in sales basket. The customer is getting a discount but without eroding your brand. At retailocity that is what we do. Contact me at [email protected] for more information if you are interested.