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Discounts and risks. How to sell after the holidays
15.01.2019 7894

Discounts and risks. How to sell after the holidays

Sell-out. This period, with bated breath, is expected by many buyers and retailers. The first - in the hope of gaining profit, the second - with the desire to get rid of commodity residues. At first glance, there is nothing complicated in the sale: I pasted the coveted inscription SALE on the window and go ahead! But in fact, a sale is a dangerous commercial trick that only professionals should repeat. Otherwise, you can remain, as they say, without pants. About what pricing should be and how to correctly calculate the retail value of goods for sale, says SR expert, business coach Maria Gerasimenko.

Maria Gerasimenko Maria Gerasimenko -

CEO of FashionAdvisers, an expert in the management and development of fashion business.

@mariagerra, www.fashion-advisers.ru


So, before gluing four bright letters on the glass, let's go back in time - at the time of the purchase of goods. This is important because on what conditions the collection is purchased, the possibility of discounts and sales in the future depends.

Example:

A small shoe network collaborates with suppliers from Europe. Traditionally, stores at the end of the season sell at a discount of 50%. The network also arrived in the already distant 2014 year, when the purchase took place at the 50 rubles exchange rate, and the sale at the beginning of the 2015 year came at a time when the 1 euro cost about 100 rubles.

Questions:

Will the distribution network be able to restore the previous assortment volume in new purchases without attracting additional investments?

Is it wise to make a sale in such a situation?

What else can be done to attract buyers who have already lost their appetite for shopping?

Thus, the roots of the “carnival of discounts” rested in simple mathematics.

What should be the pricing so that we can rejoice buyers with fear and reproach? There are some factors that are common to most economic models of retail stores.

We analyze the pricing structure in detail.

Кmargin rate


Margin rate

% of the retail price of the goods

Cost of TK, rub / g

1

35%

Operating costs, rub / g

1,4

45%

Rent, rub / g

0,6

20%

PHOT, rub / g

0,24

8%

Advertising, rub / g

0,18

6%

Household expenses, rub / g

0,03

1%

EBITDA (earnings before tax) before sales and shares

0,9

30%

TOTAL:

3

100%

Looking at the table, it immediately becomes clear that if the cost of goods is equal to 1, then the primary mark-up coefficient (Mark Up) should be equal to 3 on average in order for the store to be profitable and able to conduct promotions and sales.

If the margin coefficient is from 2,25 to 3, then EBITDA will be significantly lower initially, and discounts and sales are significantly limited.

If Mark Up is initially less than 2,25, the store will not have the opportunity to carry out promotions and sales, since holding them will simply be at a loss.

Of course, there are exceptions to this model, as well as to any rule, which will allow us to reduce Mark Up and keep promotions and sales. It:

  1. Product cost reduction

  2. Cost reduction

Immediately answer the question that logically arises among many business owners:

“Or maybe you should initially lower the margin coefficient and abandon the stock?”

There are some areas of business that successfully operate without sales and major discounts: the auto business, some representatives of the luxury segment, some designers, ateliers, etc. They have no purpose to reduce inventory balances. They strive to add value to the product. At the same time, shoe retail in the main part, on the contrary, pursues other goals - to interest the client, give a vivid emotion, encourage to make an impulse purchase and get rid of residual goods.

Thus, during the season the store must sell 50% of the product at full cost, 40% with discounts and about 10% will make up technical balances.

When to start a sale?

In many countries, sales periods are regulated by law. In Russia, everything is different, we have seen cases of a sudden start of a sale in the middle of the season, and sale of sandals in the winter. Both that, and another - the lost profit.

To avoid this situation, it is necessary to plan a stock and sales schedule in advance. And it’s worth starting off not so much from the market as from the seasonality of your particular business. Build a sales schedule, and you will see where there is high demand, where the decline in demand begins, and where there is a completely low season.

Warming discounts need to start in the wake of the high season, the sale should start in a period of declining demand, and it must be continued until the end of the low season.

Why is there no universal recipe when to start a sale? Because Russia is a large country spanning several climatic zones. At a time when the low season begins in January throughout the country, shops in the resort cities of southern Russia record high revenues.

The only thing that unites such different climatic regions of our country is the New Year time, which begins at the end of November. Since November 15, most stores dress up in Christmas windows and companies start warming up, stimulating promotions. The peak of attendance at shopping centers and stores occurs in mid-December, when it is possible to record indicators that are 2-3 times higher than the average annual.


New Year and post-holiday promotion actions

No matter how fun and exciting the promotions tied to the New Year and Christmas holidays may be, it is always the same - marketing and mathematics. The first thing to start with is to determine the purpose of the action. The assortment participating in the promotion, the duration of the promotion, advertising and communication tools will depend on this.

The goals are different: increase the average check, conversions, stimulate sales of a certain category, strengthen the loyalty of regular customers, attract new customers or reduce inventory balances. The bottom line is that if you hold an action without a specific goal, then its result will not be the one you expect from it.

After the goal is determined, it is necessary to determine the timing of the action. It is important to understand that a well-designed and planned action must have strict deadlines. The average duration of the campaign is within five days, ideally - 2-3 days. It can be “customer days” when the discount for regular customers increases to 30-50%. Or a discount on the first item in the 10% check, the second - 20%, the third - 30%, designed to increase the average check. Or it can be a category action “When buying shoes - a clutch as a gift”.

When you set a goal, it will become clear which assortment is participating in the promotion. The only thing: we do not recommend selling the basic range with big discounts. You buy this assortment from season to season, and it sells well without discounts.

How to attract a buyer?

Buyers are known to love emotions. Therefore, first of all, the atmosphere of the holiday should reign in the store: from the smiles of sellers and music to the aroma of tangerines and pleasant treats for all visitors to the store. For example, visitors can treat visitors with fortune cookies, tangerines or branded gingerbread cookies. Or arrange a mini buffet, give gifts, make a prize draw and much, much more. Fortunately, in Russia, the season of New Year and Christmas holidays stretches for almost two months.


This article was published in the 144 issue of the print version of the magazine.

Sell-out. This period, with bated breath, is expected by many buyers and retailers. The first - in the hope of gaining profit, the second - with the desire to get rid of commodity residues. At first glance, in ...
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