Newsagents selling the Junior MasterChef range have had a lesson this week in banking dollars and not margin thanks to the Big W pricing policy on this range.
Some newsagents are obsessed about the percentage they make on each item they sell. Too often they lose sight of the margin dollars they can bank with a smaller mark-up and a higher volume of sales for a higher than newsagency average priced item.
The suggested retail price of some items in the Junior MasterChef range was $39.95. Big W had these items at $21.95. We made a decision to go with a smaller mark-up which got us to a price for these items of $24.95. At this price they are selling at a good rate, certainly faster than if we went with the suggested retail price. We are banking more dollars on the sale of one of these than on three greeting cards.
Further, shoppers do not come to us expecting to purchase a Junior MasterChef item so the dollars banked are impulse purchase margin dollars – the very best kind as they boost our sales efficiency.
So, what is better, a higher margin on products or more margin dollars banked through considerably higher sales? The latter in my view. I can bank dollars. I cannot bank a percentage.
Our approach to pricing was taken on the basis of goal sell through. We would like to have the space back within 30 days. This would definitely not be achieved if we went with the suggested prices. It should be comfortably achieved with our Big W style approach to pricing.
Big W is all about volume. They pursue banking margin dollars rather than margin percentage. When you think about it, newsagencies are too. We have excellent traffic every day. Considerably more traffic than many other retailers.
Too many newsagents obsess about margin percentage. As I noted above: I can bank dollars. I cannot bank a percentage.