Whether marketing online or in store, discount remains a major incentive that stimulates sales. With the economic downturn, discounting has become a big inducement for most shoppers to make purchases. How do retailers make up for the gap in discounted goods? Who bears the brunt? TONIA ‘DIYAN writes
As the recession in the country reached its crescendo earlier in the year, not a few Nigerians had to rethink their spending.
For those used to embarking on spending sprees, there was a reduction, necessitating the prioriotising of their purchases. For those spending averagely, it was time for a cut.
The ripple effect of this was a negative impact on the purchasing power of individuals, as well as a lull in the sales record of most retailers.
For instance, a housewife, Adeola Toluwani, recalled that in the last six months, she had to reduce her spending by 60 per cent to cope with other pressing needs of the family like school fees.
Similarly, a retailer at Ikeja City Mall, who pleaded for annonymity, said she had to confront low sales with discount sales. This, she explained, has led to an improvement in her sales record.
Indeed, the economic downturn has made discounting the mainstay for nearly every business. This has led to retailers cutting prices.
Some retailers have likened deep discounting to “a drug,” and said: “We are carefully reducing our dependence on high discounts to drive attendance.”
From findings, internet users are more into discounts. In fact, nearly a quarter of respondents The Nation Shopping spoke with said they would do anything to get 40 percent or more off items they like to buy at anytime.
Seven out of 10 internet users said they would sign up for an email newsletter to get 40 percent or more. Also, more than half said they would “like” a page for the same deal, and nearly half would fill out an online form even when the discount is paperless.
The research also revealed that discounts enhance grocery shopping experience. It revealed that 41percent of grocery shoppers want their grocery shopping better thus, would like to receive offers on their mobile device as they enter a store. This is said to be one of the primary factors that make grocery shopping a success.
Though the actions are simple enough for shoppers, they provide retailers lots of insights about who shoppers are. Therefore, retailers can better target shoppers going forward.
Merchants believe that slashing prices may not actually be such a big deal for them, after all. But on the other hand, they think they are offering discounts against their best interests and may not actually present such inviting offers always.
When price slashing and discount offers first became popular, many traders took advantage of what they saw as a veritable source of publicity and an opportunity to attract more customers. As the industry is growing and merchants are trying their hands in the marketing strategy, it turned out that the deals might not be offering the anticipated returns on investment after all, as most retailers might not set eyes on prospective customers after the deals are over.
At the Maryland Mall in Lagos, only about 10 percent of retailers who offer deals daily, weekly and monthly said they end up sustaining their additional customers. They reason that those who offer huge discounts, and don’t retain their customers, sometimes end up with low profits when it is time to sell at usual prices to make up for sales/discount period. They experience loss of the initial patronage if or when there are no contacts for follow up after sales or they do not get gain at all from the deals.
They also said because of the few customers, who visit again after enjoying the discounts, they might decide that the idea is a bad deal and begin to turn their backs on it.
However, while price slashing turns out to be bad business for many, there are still some merchants who will make it available always, saying they are seeing a significant improvement in earnings, and that the margins that they realised flowed through.
Some give out discounts of varieties of items on display daily in December and January when many people do their shopping.
Advising merchants, Supermarket.ng boss, Mr Raphael Afaedor, said: “If merchants are running deals, they should offer reasonable discounts that will still allow them earn profit at the end of it all.”
Discounts, he said, keeps the retail industry from suffering foot traffic declines particularly at this recession period.
He added that shoppers who are taking advantage of discount offers, should keep in mind that the goal of the merchant is to make money apart from creating space for new stock, so sometimes; the offers might not be quite as great as the customer is hoping it will be.
“The offer might be on products that a merchant wants to get rid off in order to accommodate new ones, or it might simply not be a really great discount,” he added.
Raphael, however, advised that shoppers should endeavour to carry out independent researches and confirm prices and product reviews before they jump on making a purchase offered as a discount sale.
