'Tis the season for peak discounts – how to stay profitable
The sales season is upon us. Traditionally, savvy shoppers can use this time of year to maximise savings in the Boxing Day or January sales, but in recent years an American import has started the process a month earlier than usual. Yes, Black Friday – now in direct competition with its cousin, Cyber Monday – the only difference being that Cyber Monday occurs exclusively online. Starting last Friday and running until the new year, shoppers will be bombarded with discount deals for items they definitely don’t need but will probably snap up regardless.
A lot is made of how shoppers can get the best deals –but very rarely do we stop to consider the ways retailers can remain profitable during a period of immense price deduction. Shoppers increasingly buying goods online coupled with an appetite for discounts all year round, means profit margins are falling for retailers. Although they may be recording a larger number of sales, the quality of these sales are in decline.
For example, Bonmarché have reported a fall in profits despite experiencing an increase of 29% in online sales. This fall in profit has been attributed to a decrease in like-for-like sales which are costlier to run and account for a larger proportion of its business.
Here are a few tips as to how retailers can get a slice of the sales market without selling themselves short:
Bundle Products: By bundling up a multitude of items, you will force consumers to pay a higher price for a higher number of items, while driving the feeling of securing a bargain among your customers.
Flash Sales: Instead of mindlessly obliging with the usual commercial sale days, create your own - a day that is exclusive to your shop and that will catch your competitors off guard.
Tiered Discounts: The more you spend, the more you save. This is a great way of encouraging shoppers to part with more cash and make high price purchases. The more a customer spends, the bigger the discount that they’ll receive.
Loss Leaders: Deploy loss leaders tactically. No, these products won’t make you a profit on their own, but they are a great way of bringing crowds of shoppers through the doors. Once they’re in your store, it’s up to you how you choose to capitalise on their presence.
Offer Free Shipping: If a customer has made a purchase over a certain amount, why not gift them free delivery? As odd as it may sound, a shopper who plans to spend nearly £100 with you may baulk at the thought of paying £5 in delivery charges.
Improve Customer Experience: Offering a more tailored or bespoke service can have a great impact on a customer’s purchasing behaviour – if they can’t get this service anywhere else, why would they shop anywhere else?
Specials for New Subscribers: Reward those who have registered interest in your company. Okay they may not have made a purchase yet, but their registered interest is enough of an insight into their intentions.
Reward Repeat Custom: Rather than frantically catering to new customers hungry for a bargain, show appreciation for the customers you have already accumulated. Treat them to free delivery or a 20% voucher that can be spent on any item. Show them you value their custom and they’ll be more likely to return and spend more with you.
Don’t be at the mercy of shopping sales – deals are to be had for retailers as well as consumers.