Discounting.. Has the art of retailing been lost?

The other day I went to the shopping centre in the city to buy a book. I was amazed at the number of retailers offering rather large discounts, 30%, 50% and even 70% off. It seems like everyone these days is discounting.

This is all fantastic news for shoppers.... Not so good for retailers. The actual cost of the discount for the retailer is one thing. Selling old stock for a great price is one thing. The theory being that it is better to get something for it, rather than get nothing at all for it.

Luke Bayliss, co-founder of Sumo Salad, agrees. "We are preferably not discounting because that has a negative impact on the business as a whole. Particularly during the global financial crisis, people may respond well to those in the short term, but they cause long-term damage."

The long term damage for retailers is that shoppers now expect a discount when they shop. Through constant bombardment of advertising and sale signage, they have been educated by the retailer – not to buy unless it is on sale for at least 40% or 50% off.

There are other ways to move stock you just have to put a little thought into it.

Tom O’Toole from Beechworth Bakery says: “A smart way to get rid of excess stock is to bundle it with one of our best sellers at a special price, creating a great value for the customer. By doing this, we can get the full mark-up on one product and a smaller profit on the excess stock.

Even if that means we sell it at cost, at least we get rid of it. It’s a win/win for everyone, including the customer. And if we can get someone into our shop with a special deal, we have the chance to turn him or her into a lifelong customer who will buy products over and over again at full price.”

Some of you may be thinking; “sell at cost”; isn’t that the same as a discount? No, it is completely different. When you bundle, you are adding value. In this case you are turning say a $10.00 sale into a $14.00 sale; not making $4.00 only from an $8.00 item. The key point is that you are generating more revenue out of each customer.

As a business you have to find more creative ways to add value, and create a win / win:

Get creative... work out the path of least resistance

Ask you clients what they want

Offer great value – not just a great price

Create a culture of service

Offer improved service, or priority delivery

Work out the little things that matter

Treat your clients with respect and do something a bit special for your clients occasionally.

The short term effect of discounting is decreased revenue, and the long term effect is that your clients will buy on price alone.