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Retailers are trying to keep up with the price-cutting frenzy of competitors, extreme-couponers and daily deal sites.
Many feel they can only attract shoppers if it is a “deal,” so that is how they are merchandising their stores.
Not necessarily smart…
For a certain time-constricted shopper, this may be an easier way to browse. Like this display at Starbucks I saw last year where all items were under $10.
But it may also limit profits as you are giving in to the mission shopper who has come in with a price in mind. Here’s what I mean…
Every aspect of retail has the same issue, customers don’t know how much something costs.
When I was in the western wear business I’d hear, “I’d like to spend about $75 on a pair of boots.” The average pair they strolled out with were about $150.
A window fashions retailer could hear, “Oh we have a usual window and I’d like to cover it for about $100.” There is no “usual” size window and the ultimate cost can be much more.
In the hotel business we heard, “I just need a bed, not the extras – I’m just going to sleep there.” If you want to sleep well, you pay more (see my post on the Four Seasons Houston.)
Think about the last time you priced a new car. Was your final decision strictly about price?
Unless you work in the sector of business you’re considering, most prices for everything will carry a lower perceived price. That’s why its up to good displays that feature a range of prices, great salespeople and great products to help shoppers get what they want, not necessarily the price they say they can afford.
That’s because customers don’t really know how much what they want will cost, just what the “deal” that has been advertised costs.
And merchandising your store based on price or discounts can leave money on the table.
Please comment below.
Hi im doing pond, landscaping business. How can i not to give customer cutting the price down. Customer love to bargain
I would suggest you get a copy of my first book, You Can Compete: Double Sales Without Discounting Grace.
In my field we do custom design jewelry, which is very similar to landscaping. you custom make something per customer request and you charge
Labor +
Materials (for us its gold)
The selling of your “stuff” has two components. You CAN discount product because it has turn. I don’t know markup in landscaping but lets say you double your costs.
if you buy it for $50 and sell it for $100, that’s nice, if you discount to $70 you might think thats bad. but if you do that once a week, a $50 investment in January by December will bring you $1040 in profit in a year (52 weeks x $20 in profit)
Thats turn.
but labor doesn’t have turn. The guys can’t work faster, there is no turn.
So the suggestion is to alwsy break down the prices in two columns:
Materials Labor
tree $300 Plant tree $75
Shrubs $200 Plant Shrubs $65
Hay $50 put out hay $15
Total material $550 Total labor $155 total Job = $705
Showing it this way makes the total not look so large “Look, the tree is only $300!” But if you discounted the WHOLE job 20% you’d only get $564. But try this, “I understand your concern Mr Jones on being around your budget, but AS YOU KNOW WE CAN’T DISCOUNT LABOR. but maybe we can do something on the materials for you.”
So if you only discounted the materials 20% ($564) it would be $451 + labor of $155 for a total job of $606. So instead of getting $564 you’d get $606, $42 more. All American know labor isn’t discounted.-David Geller
Increase your value proposition or start out with a higher price, then your not discounting your profit. As value goes up, price sensitivity goes down.
With the current negative global economic news, uncertainty in our federal budgets, local depressed economy, etc, we are focusing on the positives in our business and what customers can do with our products to have fun, relax, possibly make some cash, etc. In this situation, what would you recommend as the 1-2 key components of any holiday display?
Know who would buy this display – a buddy for his other buddy – a dad for his son – a wife. The more you think about their motivations ahead of time, the more you can hone into the products and the messaging. For example, if it were a dad to a son – no matter the age – you could say something like, “You can still be a hero to him” and place a picture of a dad and son -maybe holding up a big fish, or a trophy, or the product you are selling. Get the idea?
Nice base for us to work from. Thanks Bob!
Also, it doesn’t need to actually be a bargain. The consumer just needs to *think* they got a bargain
This article has a great title, but unfortunately the contents dont seem to match Can you write one that talks more about attraction? Not just merchandising and selling? How do you get them to come in from their homes?
Thanks!
Merchandising is only about what happens in the store. What you are asking about is marketing to get people to come in the doors. Check out these posts:
A Five Picture Guide to Marketing http://www.retaildoc.com/blog/a-five-picture-guide-to-marketing/
Leverage Virtual Trust With Social Media http://www.retaildoc.com/blog/virtual-trust-social-media/
Growing Your Business Without Groupon http://www.retaildoc.com/blog/growing-your-business-without-groupon/
Thanks for commenting Brian and hope those help.
I find a lot of these blogs just state the obvious and are basically a continuation of the title…
Merchandising is important. Got it. Now what? Would be great to see read some tips, suggestions,
Experiences. Such as some of the examples written by the readers, those are helpful !
Thanks
Hi Chantelle, there are a bunch of posts about merchandising that I’ve written! Checkout:
7 Ways to Transform Retail Store Displays http://www.retaildoc.com/blog/7-ways-to-transform-store-displays-into-sales/
10 Insights To Merchandising Your Retail Store http://www.retaildoc.com/blog/10-insights-merchandising/
Buying Tips: Gremlins Didn’t Put That There http://www.retaildoc.com/blog/rr/
Hope that helps and thanks for commenting!
I’m running a kids boutique for around 6 months. I very agree to what Doc. Bob said, customers won’t really know the actual cost of the merchandise that they are looking for. Especially the apparel’s business. So, from the experience that I have gained after these few months. I found that people will only value the merchandise according to their own “scale”. To me, how people “measure” the value is following the three aspect as below, so do I.
1. The outlet/store design.
2. The Display of the merchandise.
3. The Sales Person.
For example, you have an item cost 30 and you intent to sell at 60. Then doing something special on display to let people feel that it worth 100. So, once they flip the price tag and found out it’s only 60. They will happy to pay for it without any discount.
Excellent points Estan! Thanks for commenting!