Do you believe in UFOs? Now that’s a real conversation starter for sure. If you don’t want to go down that road then ask your non-retail friends what they think the mark up is on furniture and mattresses. Don’t be surprised when you hear answers of three or four—even 10 times markup. (Thank you recent online mattress retailer that erroneously suggests retailers mark mattresses up 10 times the cost).
I wish I could blame someone else for all the misconceptions in the retail furniture space, but we only need to look inward to see how this evolved. Face it, competition for consumer dollars is a fierce battle in our industry and outside with non-furniture categories. As a furniture retailer you live and die by the traffic that comes through your doors. Breaking through all the marketing noise is not easy and the temptation to shout out incredible, once-in-a-lifetime, never-seen-before and even the-boss-is-crazy offers is real. (Although I have had some bosses that could have justified that claim.) Unfortunately many of us have shouted those claims.
Now, if I was abducted by aliens in a UFO then I might become a true believer and would certainly testify vehemently about my experience. However, when I see the headline on the National Enquirer about alien abductions then my skepticism kicks in. Unless, of course, it’s a celebrity abduction. As retailers, we need to back up our claims with tangible proof.
All kidding aside, let’s examine a few best practices and situations that allow you to make your claims while retaining retail credibility.
Charitable Donations for Extra Savings. No doubt this may appeal to the good-hearted nature of most consumers. Christmas is a great time to use this promotion. Bring in an unwrapped toy for distribution to needy families and receive extra savings. The key is the believability of the offer. A retailer in my city ran this in December, but the claim was a little out of this world. “Bring in an unwrapped toy and save up to $1000 on your purchase of $2000 or more.” What they did not say is the savings was off MSRP pricing. Another retailer offered savings up to $100 for the same process. The theory in this approach is simple, customer gives a little, the retailer gives a little more and all parties feel good. Plus, the retailer makes a sale while supporting their communities or causes.
Special Purchases and Factory Deals. These are easy to believe and most consumers (especially females) know how this works. Look at places like Ross, TJ Maxx and Homegoods that effectively use this approach. Great values and limited quantities are believable and motivating. Although you should think about how your competitors might combat your offer. For example, a mattress retailer in my market suggests that the mattress factory built too many foundations and they bought all of them to save you thousands of dollars. Their competitors, if given the opportunity, will tell the consumers that mattress factories build box springs to order and the so-called special factory purchase may not be real. Make sure that special purchase or factory deals are real and not contrived.
Percentage-off Sales. By far the most widely used and abused approach in our industry. Perhaps this is where the slippery slope has created the most consumer confusion. I once had a salesperson who would counter a customer’s request for a discount with this approach. “How much do you want off then I will make up a price.” If you’re running a percentage off promotion then it behooves you to have actual examples in place on your floor. It really boils down to the actual perceived value of the product not as it relates to the percentage off. It’s funny how most of us recognize a really good deal even if we don’t know a product very well. Go to any garage sale and you’ll understand a consumer’s ability to know a really good deal even if they don’t know the product.
Buy-One-Get-One-Free Promotions. We know that “FREE” is a powerful four-letter word that gets attention. Some of the big menswear retailers use this approach religiously and some even claim to buy one and get two, three or four free. Just like UFOs some people want to believe and others can see right through the offer. Perhaps this is an area that has supported the premise of unbelievably high mark up on furniture and mattresses. Is your BOGO offer real and believable? Have you at least had the item offered on your floor at the higher price in advance of the promotion?
Clearance Sales. Of course, this is widespread throughout all retail and is easy to validate. These values should represent real savings from the everyday prices in your store and be easy to promote with credibility. A retail friend of mine recently used a nice carved bed as a loss leader in his clearance event. It normally sold for $599 and he sold it for $199. He was able to promote it at a legitimate over 50% off. Yes, he lost money on that one but it sure made a statement. Of course he sold other items such as the dresser/mirror, night stands and chest at a profit. The point I am making is that he offered real and obvious value that both customers and sales people believed.
This leads us to the arena of believability. If your sales people believe that the values being offered to the consumer are real and substantial then the vehicle by which they are promoted may be secondary. Most salespeople I’ve managed over the years want to be truthful and honest with customers. Product training and well-thought-out advertising should work together to get customers in the door and show them merchandise that supports the advertising. It is a delicate walk on the retail tightrope for your store, your salespeople and your customers. When your salespeople believe in the deal or the product, they then sell with subliminal confidence. When customers believe they got a great deal they tend to tell their friends and family.
Of course, there are those retailers that have stayed pure and avoid the retail hype of sales, percentages off and other offers. There are currently some top 10 retailers that have built their business without the use of percentages or excessive savings claims by putting really stylish product at great prices in pleasant and beautiful retail-friendly showrooms. Some have built on concepts of room group savings and other logical reasons for customers to buy more. Certainly, financing is one method to add value to a purchase and some top-tier retailers use this with skill to create additional value while adding limited time opportunities that move customers through the buying process.
Where is this all going in our retail furniture world? It would be naïve to think we would ever become pure in our approach to discounts and pricing. Perhaps you remember when Sears went to an everyday low price for a period of time and soon abandoned that process. Of course, look at them today and their future seems a bit dim. I suggest your approach to pricing, savings claims and promotions must retain a level of justifiable credibility. The internet and customer ratings will quickly smoke out those retailers that forget the importance of blending advertising, promotions, merchandising, financing and in store customer experience in to a believable package.
As it relates to UFOs, I am not sure I really believe in them. However, just to be careful, I did wear a tin foil hat while writing this article. See you in outer space.