Make it work

A sale is among the top traffic builders for retailers. A sale brings in customers, moves merchandise and helps cash flow.
Competition has made the sale an even more significant factor in retail marketing. Consumers are more price conscious and sales-oriented as retailers take a more aggressive approach to reducing inventories and generating revenue.
The top five reasons for holding a sale were noted in my Feb. 6 column. In this issue, let’s look at what makes a sale effective.

Sales are particularly effective if:

1. A lot of other stores in your immediate vicinity are having sales. This creates a "sales mentality" among shoppers. If a number of stores in your neighborhood are having sales and you’re not, shoppers may ask themselves, "Why not?" You are perceived as "full-priced." They may feel reluctant to buy from you until you have a sale.

2. You are willing to accept lower profit margins and make it up in volume. Sometimes, traffic count is more important than profit margin. If you can lure them into the store with your sale, you can sell enough merchandise to pay for the promotion and still have some left over for yourself. This is a case where you may be able to get help from suppliers. Purchasing in larger quantities may afford you a discount, which you can pass along to your customers during the sale.

3. You want to reduce inventories and build business during slow selling periods. The shelves are full. The stockroom is jammed. And you’ve just ordered the new season’s goods. Here’s when you want to get rid of the bloated inventories.
Discount deep enough (at least 15%, 30% or 40% is even better) to make it move. It’s costing you a lot to keep those goods in stock: you have all that money tied up in inventory that could be used to buy more, faster-turning inventory; those goods take up space that could be used for displaying other, more-profitable goods; and face it – if they haven’t sold by now, they aren’t going to get any better-looking to customers gathering dust on your shelves.

4. You are trying to attract new customers. A sale can grab attention, make prospects aware of your store, and maybe interest people who might not otherwise have considered taking up the hobby you’re promoting. The attendant publicity is one more way to put your name in front of customers. And name awareness is the No. 1 reason people buy products.

Three important things to remember when holding a sale:

1. Be sure to have plenty of stock on hand of whatever is on sale. Offer a rain check to customers if you run short.
2. A sale must be heavily promoted so as to attract non-customers. You don’t simply want to give a discount to the folks who would regularly buy from you anyway. The sale must bring in new customers.

3. Every sale must have a reason. Simply having a sale doesn’t create the perception in the minds of your customers that they are getting a bargain. Rather, they will simply believe that you are overpriced the remainder of the time.
A sale is the life blood of the retailer. It can reduce bloated inventories, generate cash in times of need, and serve as a reward to your customers. And that’s good for business.

Robert Grede is the author of "The Retailer’s Guidebook" available online at He teaches marketing and promotion at Marquette University.

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