At this time every year suppliers offer end of line, end of year deals. Some deals are exceptional – 70%, 80% and sometimes even 90% off usual wholesale prices. The buying opportunity is excellent and smart newsagents set themselves up for a profitable post Christmas season. Most suppliers only offer the deals to newsagents who support them. Some suppliers only offer such deals through marketing groups.
That such exceptional discounts are available from time to time is another reason to deal with certain suppliers. The ABC Christmas CDs I blogged about a week back are a good example. We paid $1.50 and sell them for $4.95. One customer bought 50 on the weekend – amazed at the low price we offered.
Setting yourself up for these buying opportunities depends on your buying relationships through the year and your connections – i.e. marketing groups or group buying with colleague newsagents.
So you can discount cds and not cards..i dont understand the difference…..if you can buy boxed cards at 80% off ,which you can, and sell them for half price, you double your margin and 10 fold your sell through ..end result 20 times better off profitability in that segment…sometimes your reasonings for doing one thing and not the other arent consistent Mark
Helen,
You can discount when it suits you. Don’t listen to me.
I choose to not discount cards because I do not want to educate customers – calendars are ruined in some areas because of this.
The CDs are an item I do not usually carry, they are not current stock and therefore not affecting others. People with these right not have bought for what I paid.
Boxed card sales, at full price and excellent margin, are very good for us right now. We are watching it daily.
Mark
We did have a customer yesterday that bought ten cards at full price, a really good profit. My partner gave the guy 10% off just because he chose to shop with us and spend a lot in store.
I think by doing that we’ve won a customer and the fact of being out of the blue, gave him a great experience, seeing we don’t advertise discounted cards but he got a discount.
i thought educating customers would be exactly what you would want to do ,educate them you have great card stock,at great prices… 10 20 even 50 % better than your competitors..then they will tell 10 people ,who tell another 10 and so on and so on..and guess what all would be back next year.to buy again..dont see any flaw in that,especially,as you said ,you can always get bulk and special deals from all companies on boxed cards…
Helen, by offering too many discounts you are also devaluing your own brand. You have to decide if you want to be a cheap discount shop or a quality shop. Customers don’t always consider cheaper to be better.
I agree with John.
Hi, John.
I had a few questions:
1. Discounting –> Devaluing brand?
2. Discounting –> Losing profitability in long term?
3. Discounting high quality product –> Creating a cheap discount shop image?
My understanding is
Discounting is an import strateg played by many major brands in supermarket and c-store industry. In these industries, discounting creates strong and powerful brands. These commidity brands cannot survive without these strategy (as the owners of the retail outlets will choose the competitors’ brands).
Newsagency industry used to have the pride for retailing high quality exclusive products.
We have a concern that discounting may affect the profibility on the long term. That is why many our colleagues are protesting the discounted offers of magazine subscriptions, discounted online lotteries. and monitiong the discounted bulk stationery outlets.
I considered securing market share is important in the tough time, and discounting (with discipline) can grow our sales, and maintain our profitabitlity.
Mark made good examples that discounting high quality products creates great shopping experience to our customers, and bring the retailer more profits.
When many brands go into supermarkets and convenience stores, these brands already turn into commodity brands. Discounting is healthy and necessary for these brands, if we want to adapt the changes.
The key points may be:
1.How can make a displined discounting strategy for all newsagencies?
2.How to get support for our discounting campaign from suppliers?
That may be the strenth of a market group.
Cheers,
Sunny
Hi Sunny. I think discounting when used appropriately is a good strategy. I think the point I was making is that Helen was saying discounting should be used more often as a way of offering lowest possible prices and undercutting competitors. I don’t think that is a good strategy unless you want to have a $2 shop.
John thanks for the tip but the same hallmark, sands, artwrap etc etc boxed cards you buy for $7 to retail at $14,i buy in bulk(over 8000 units firm sale) at $3 and sell at half price…exact same cards, not cheap and nasties ..my customers are much better off…im much better off…instead of selling 100 boxes at full price (which is what the previous owner of my shop sold)i sell all 8000 at half price but still full margin…im more than happy with the image that that portrays.good value,good buying and good cards
John, your one of those people who loves to have high gp%, I would rather do what Helen does and have more dollars in the bank. At the end of the day you cant bank %
Supermarkets and C-stores use discounting for a few different reasons.
1. Product introduction – where they discount a product to encourage consumers to try it.
2. Price based competition – where products are discounted to compete on price with other competitors.
3. Value perception – where products are discounted to create a perception in the mind of the consumer that the store offers “value for money”.
4. Clearance – where product is discounted because it has not sold at the standard retail price.
Discounting cards is creating a “value for money” perception.
When ecomomic times are tought consumers tend to congregate towards two ends of the market – the low end and the high.
Helen, you apear to be targeting the low (maybe mid-low) end of the market. John, you appear to be targeting the high (maybe mid-high).
Both have their advantages and disadvantages. Low end focues on quantity sales and low prices, high end focuses on product quality and high prices.
In the case of discounting cards, the product may very well be the same – but that makes little difference. The consumer doesn’t perceive it as the same. In Helen’s case the consumer perceives her as a lower end retailer and in Johns case they perceive him as a high end retailer. They are targeting different market segments.
Its all about where you want to position yourself in the marketplace.
Exactly my point i was making the other day Helen in the other thread. I’d much rather sell boxed cards at a lower price point and sell a much higher volume as opposed selling them at a higher price point and moving a much lower volume. To me that just makes perfect business sense and can’t for the life of me comprehend how anyone could see it any differently.
I mean isn’t the main objective and focus of our business to get as much money in our pockets as we possibly can? At least having the lower priced cards as well as the higher priced Hallmark/John Sands cards you’re giving the customer the choice and catering for every type of customer.
Some will like the Hallmark cards and buy them and won’t buy anything else, all well and good you still get your margin. Others might not want to spend or have the money to spend on the higher priced cards and they’ll go the cheaper option. Again all well and good because you’re still getting your margin and the customer is a hell of a lot more likely to come back because they have the choice. They win, you win. Everyone wins and everyone is happy.
To me it’s no different at all to selling different priced cards for every occasion on a year round basis. We have the $1.99 Hallmark warm wishes selection as i’m sure others do as well and go up to the most expensive cards in Hallmark’s range as well as everything in between.
You can’t pigeon hole every customer in the same category as they aren’t all the same hence the cheaper range of cards up to the most expensive. I can’t see why it should/is any different at Christmas time. In fact IMO there’s probably a much better reason to offer the varied price points at xmas time given people have to fork out much more money on other presents as well and their dollar becomes even more valuable.
I haven’t been able to offer cheaper cards myself this year as for various reasons and to my regret i haven’t been able to find the time to source them. But given the chance i’d have had no hesitation to to sell them at the cheaper rate because i know very well that i’d have been much better off financially if i did.
Dean
You can’t cater for every type of customer. Trying to will only make customers confused as to where you sit in the marketplace.
Some stores focus on high volume at a low profit per unit and some focus on a low volume at a high profit per unit.
Selling more does not necessarily equate to more profit.
Dean,
You lost me there. I think Helen is discounting cards from RRP, not just selling cheaper cards.
I agree that you have to pick your market. I grew up knowing my newsagent was a bit pricey but the quality was there.
We offer the mid to high end cards, as there are bargain shops around us, although we throw in the $2 boxed cards in a trolley behind our main boxed card display.
Go back to what Mark wrote originally. He makes sense. Buy well so your setup to discount. Use discounting carefully to build rather than to destroy. Helen you are talking about something completely different.