Money saved in the store MUST be spent in the store

by Dirk van Wijk

The headline above should be the battle cry for every retailer.  Retailers in every spectrum of the retail world are faced with the ever- increasing "savings," "deals" and "discounts" offered by their competitors. This attitude is fostered by the large amount of flyers, television ads and a multitude of online and other marketing vehicles thrown at us and all this at the expense of the bottom line. How do "they" do it?

Who are "they"? They can be anyone. The large chains with the perceived deep pockets, buying groups who collectively advertise and to some extent, the smaller individual retailer who feels forced to jump on the band wagon. No one can really afford to discount, have sales or give away deals. Why should you charge less for products that people really want to buy anyway? Well, if you don't, you are perceived to be an expensive store; you're not "with it," so to speak.

How do they do it? A better question is: "how is it done?" The answer is actually very simple, but labour intensive. It is imperative that in today's retail environment, large or small, the image of "affordability" and "value" comes across as soon as customers walk in the store. For example, the products sold in a Birks Jewellery Store are expected to be high priced, yet a young couple looking for wedding rings will be on cloud nine walking out of the store thinking they got a very good "deal." Never mind that the rings were a small fortune – they got a deal! The in-store promotional materials are telling us that we all can afford what this store has to offer.

Translate that perception to your own store. The products you sell are no different than jewellery – customers want the products. But giving discounts and deals costs you money... a great deal of money, in fact.

Start with creating that value perception in your store by having product displays that reflect any of your promotional materials (flyers, in-store posters supplied by vendors, nationally advertised products etc.). Focus on products that have higher margins where you can afford to take a little less. Be aware of your "price sensitive" products. These are the products that your customers know the acceptable retail price, and your retail price should not be higher than what your competitor charges.

For every advertised, sale item and discounted product in your store, you should merchandise an "add-on" item. This item needs to complement the promotional merchandise on display and recover the lost margin dollars. Not offering discounts, sales or deals may hurt you in the long term because of the shopper's perception of a lack of a bargain. By taking the approach that "money saved in the store, must be spent in the store", you will find that "being with it" pays for itself. •