Administering discounts

Here comes the New Year and it has bought a bonanza of off-season sales and discounts with it. The apparel and footwear stores have already announced their off season discount schemes. Levi’s® is starting the New Year off with a bang with the launch of the Levi’s® Grab ‘Em All Sale. With incredible discounts of up to 50 per cent off on the world’s most loved denim brand. Not only are they offering massive discounts but also giving purchasing options which you can exercise through three easy EMIs, with no interest, processing fee, and foreclosure charges. Similarly lot of other brands like United Colours of Benetton and Adidas have also announced their end-of-season sales. There were times, when people would rush out to buy products with discounts up to 20 per cent off.  Whereas, comparing the percentage of discounts offered today, you will discover that 20 per cent or 30 per cent discounts is a thing of past. Now, at any mall or a high street you will find that the percentage of discounts has increased from 20-30 per cent to 50-70 per cent off.

Challenges for retailers

The tremendous rise in the percentage of off-season discounts, surely poses a major challenge for retailers in India; the challenge of encouraging people to buy products at an MRP (maximum retail price). Retailers, making the consumers habituated to buy products during off-season sales or during discounts seasons find it difficult to motivate consumers to buy during non-discount periods. Another challenge retailers today might face is, building and retaining the trust of the consumers in the product quality in the light of huge discounted prices on products. Majority of the consumers today blame retailers for overcharging them during 20 per cent discount offer. Considering the current scenario of discounts being offered by retailers it is advisable for the retailers to administer a balance between the MRP and the discounted price.

Alternatives to discounts

It is advisable to retailers to consider various other alternatives to attract consumers:

Collective retailing

It can be one of the alternatives. Through this the retailer can combine two to three products together and sell them as a collection. This will hide the actual price of the single product and the consumer will not feel cheated about the exact price of the product. An added advantage is that the consumer gets to have a ‘collection’ of products at a reasonable price.

Exclusivity

Another alternative can be the exclusivity of the product. Exclusivity leads to lesser comparisons of the products with other brands. The less the customer compares, the greater is the exclusivity of the brand and the product. This may mean providing a different and a better quality product than your competitor.

Excellent merchandise

While selecting the merchandise, look for the best product mix and avoid any duplication in the product range. Every product on the shelf needs to make its way to the consumer’s heart and ultimately pay its way through. 

Internet friendly

Retailers are advisable to think about offering an Online shopping portal for their products to help raise the gross profit. Online retailers are seeing an increase in sales today. This may not mean that the retailer can increase the prices for online sales, instead it may mean that the retailer can increase his/her profit because of the products sold online.

A word of caution goes out to all the retailers who believe sales and discounted prices as the best way to charm the customer. A little more creativity can lead to surprisingly high profits.