Tuesday, November 17th, 2009...10:54 am
Retail Sales Stupidity: Coupons and Discounts
The New York Times had an article recently on the $5 pizza slice from Brooklyn. It’s a small pizzeria that recently raised their price, which was already high at $4 to $5. Here’s a video about them. They wanted to maintain profitability. Today’s thought is short: how high is up?
Contrary to the many pundits saying to lower prices, add discounts and coupons I ask, “How high is up?” Can you bundle some products or add a service to make more profit? That’s all you should be concentrating on: how to increase profits – not play Santa Claus with your markdowns. 
Cheap people like the occasional rotten employee will be with us as long as we are in retail. The trick is limiting both and find both the profitable customer and loyal employee.
It isn’t brain surgery but it does take thinking. When you get ready to offer yet another $20 coupon to your customers realize you have to sell at least $600 to make up the profit you’ve given away because the average GREAT business only makes 3 cents on the dollar. (It’s even worse if you are not profitable.)
Leave Santa Claus marketing for the others, your goal is to be profitable this holiday. Think about it.
4 Comments
November 17th, 2009 at 11:04 am
[...] This post was mentioned on Twitter by BobPhibbs, BobPhibbs. BobPhibbs said: New blog post: Retail Sales Stupidity: Coupons and Discounts http://www.retaildoc.com/blog/marketing/coupons [...]
November 17th, 2009 at 9:01 pm
Social comments and analytics for this post…
This post was mentioned on Twitter by TheRetailDoctor: New blog post: Retail Sales Stupidity: Coupons and Discounts http://www.retaildoc.com/blog/marketing/coupons...
November 18th, 2009 at 12:28 pm
Bob,
Your advice is so true. I finally did the math on a coupon I have regularly sent out in November.
Taking a look purely at profit, I realized that I could take a 40% drop in top line sales in November and still make the EXACT SAME PROFIT in dollars without the coupon.
I know the coupon brought in traffic, but not that much. I dropped the coupon this year and although sales were down the first week of the month, they are back up to and above normal. I expect at worst I’ll be down 3-5% in sales and up huge in profits!
November 18th, 2009 at 12:41 pm
Great news Phil! Spread the word, discounts don’t = $ in the bank but $ out of your pocket!
Leave a Reply