Moderation is key because there are drawbacks to using discounts as a tactic to boost sales
"Sales are slow this month, stock is deteriorating; turnover is static; so let’s have a sale to free up cash."
This is a frequently implemented solution many retailers use to improve cash flow. There’s nothing wrong with it if used in moderation. People like a bargain and we know we can grab the attention of customers with a sale or special offer.
It’s “moderation” that is key because there are drawbacks to this tactic being over-used. The biggest is the negative effect on profits and ‘training’ customers to expect regular discounts.
If sales are too frequent it makes the normal price of products seem high by comparison. Therefore people are less likely to come into your store and buy at full price – unless of course you provide other reasons for regular visits.
Get sucked into the pressure of joining the Black Friday or Boxing Day hype and people become over-whelmed by sales, buy less at a lower price and leave you still holding stock that you need to sell at a lower profit.
If you get stuck in a cycle of discounting it can be hard to escape because you have accustomed people to expect reductions and it’s hard to reverse that expectation. There’s plenty of research to suggest it’s likely you could have sold most of the stock at full price anyway and if it's something they want or need, they will buy it.
There are alternative tactics to the discounting treadmill that every garden centre can use:
- Limit sales periods so that they remain special events in customers minds
- Develop a loyalty / rewards programme offering customers options as a purchase incentive that they can redeem.
- Reward people with incentives for referring friends, providing product reviews and sharing products on social media
- Use your database to gain insight into understanding buying patterns and 'products in demand' to ensure you are meeting the needs of your customers. ‘Demand driven’ is more likely to be sustainable long term
- Use product presentation; merchandising and inspiration to drive sales.
- Don’t underestimate the importance of benefit signs to provide customers with a reason to buy
- Offer quality product, value for money
- Spend time and effort developing Customer focussed service and personnel skills. If someone walks into your store, they are usually there to buy and the success of their visit for you and them is often due to their interaction with the people who represent your business
- Inform and entertain through instore demonstrations, events, activities, newsletters; social media posts.
If you provide people with reasons and incentives to visit your store repeatedly without the expectation of discounts; it’s more likely they will become loyal customers.
- Joy Lamb