I heard of a newsagency discounting boxed Christmas cards this week – buy one and get the second pack for 50% off. This is nuts in my view for a couple of reasons: boxed Christmas cards sell easily right now without discounting and if you are trying to drive loyalty then use a whole of business loyalty approach like discount vouchers or, groan, a points-based loyalty program.
Okay giving the second box of cards at half price may drive sales. I know in my own newsagencies it would not be useful since 73% of boxed card purchases are two or more boxes. Why would I discount for a volume purchase I would get regardless?
I suspect the newsagents running this promotion will find themselves discounting sales they would have got anyway.
It’s vitally important that discounting has a business purpose, that it results in purchases you would otherwise not have achieved. Structured discounting, beyond that to move dead stock, needs to be well thought through with justification deep within your business data. Doing it on a whim, based on gut feel or because you’re told to will more likely result in your giving away margin you need not give away.
The discount voucher approach, of a cash off the next purchase via a voucher printed on the receipt, is a whole of business approach. In my newsagency where we have been doing this since February, more than half the vouchers issues for greeting card purchases result in redemption purchases in other departments. It’s important we promote our whole business and not just isolated categories.
I’d encourage newsagents to think carefully before they run a Christmas card discount like the one I have described. Sure they will feel they are getting good sales. I suspect a review of business data will show they are unnecessarily giving away margin dollars. There’s no sense in that.
Mark why not be honest and name the promotion, TLC has the only loyalty card capable to communicate with customers, promote through all TLC stores and measure the results.
The promotion has enabled our store to participate in the following
1.Promote via email to over 190,000 customers, something a voucher cannot do
2.Increase the opportunity to sell other items other than boxed cards
3.Take sales away from majors and others
4.Measure results.
Just to make it even better, the discount is funded by TLC, so we don’t lose any margin. The customer gets a great deal. Win Win if you ask me
Cris, no dishonesty: when I head about this no business name was mentioned so I don’t know for sure my store is the group you mention.
Discount vouchers can grow your email / txt message marketing databases. They are also a new approach, shoppers with loyalty fatigue love them.
The best email campaigns are those run by local businesses for the local business.
The card promotion focuses only on cards.
Any good loyalty program drives sales. My personal view is that a VIP card is very old school. Loyalty experts say they are on the way out.
It makes no sense to me to discount an item you’ll sell well this time of the year. Our boxed card sales are up 32% YOY without discounting.
I don’t see how a buy 1 and get 1 at 50% off helps you sell other products. Mark’s right, discounting Christmas cards in November is a desperation move.
Cris,
1. Promoting via email is not new and not incredibly effective. It has a poor rate of converting viewers into doers. Email promotion is essentially the electronic version of printed letterbox brochures.
2. All promotions that get people into a store increase the opportunity to sell other products.
3. Taking sales away from major’s is great, but its a loosing battle. We won’t win a price war.
4. Almost all promotions have some function by which they can measure results. This is not something new.
Margin has to be lost somewhere. If TLC are funding it then those funds have to be coming from somewhere – either from suppliers or members.
Training customers to expect discounts is a dangerous business.
This morning we received Xmas cards (gift cards) from GG unsolicited and they went straight into returns.
This part of our business is so misunderstood by the publishers. We don’t want books, cards, toys, or rubbish on mags because we SELL THAT STUFF IN THE REST OF OUR SHOPS AND MAKE MUCH MORE THAN GG or Network are giving us and Xmas is OUR TIME OF THE YEAR for maximizing our sales.
e.g. Harpers Bazaar has a journal on it this month. Back it goes because I sell journals all year at a much better markup.
Kids mags with rubbish on them DO NOT FIT IN OUR MAG RACKS AND THEY LOOK SO UNTIDY SO BACK THEY GO TOO.
Is anyone listening?
Most newsagents are reducing their pockets so with this in mind please GG and Network try to ensure that you send
pristine product – no bookazines – they don’t fit either.
We simply have to get you to understand that we are on your side – we want to sell more mags but you are making our lives too difficult.
Just get the core product delivery right and we will be much happier.
I have had $500 worth of shortages in less than a fortnight and the missing mags
had about 23 putaways which won’t now be received because GG have now advised me that the goods that they were sending to me again HAVE ALSO BEEN LOST.
I HATE MONDAYS AND THURSDAYS – THE LACK OF EFFICIENCY IS APPALLING.
Cris with all due respect I fail to see the value in doing this either. You say you aren’t out of pocket because the offer is subsidised but what about the damage this type of discounting does to our channel? It’s no different than when the deep discounters and majors reduce calendars in early December, it’s just plain crazy. TLC may think they are taking sales away from the majors but shoppers being the strange creatures they are will keep on perceiving the majors to be cheaper anyway, regardless of what smaller retailers offer.
I say let’s grab proper margin for these products and leave the bastardisation of them to the majors. As Jarryd said “training customers to expect discounts is a dangerous business”
So true, the more we discount the more it is expected.
Don’t discount until you have to, the damage done is irreversible.
“training customers to expect discounts is a dangerous business” now have a look at the story above this one and is there a difference-we can choose not to put those packs out also what about the damage that some newsagents do to our channel with ridiculously over priced items -makes us all look expensive doesn’t it
P,
The average consumer already perceives newsagencies as expensive. In some categories there is no benefit for us to not to meet that expectation. We’re better off maintaining our position in consumers minds and reaping the benefits of higher margin that come with it.
If a store wants to position itself in the convenience or premium space then pricing items to reflect that makes perfect commercial sense and we should not be afraid to do so.
June I hear you and agree with every word. My Harpers Journals were taken off and only the mag put up. If someone had got a free journal I may have lost a journal sale on full margin. and those xmas cards straight back with the top off. Like i am going to take 25% when i get a full markup on my own stuff. And i didnt even order it???