Here’s your Apprentice moment:
If you had a fruit stall in a town centre market, and assuming your stock had a one day shelf life, toward the close of business, would you:
a) behave exactly as you did at 8am and bin all left over product each day;
b) slash prices hours before closing to sell out; or
c) keep relatively full pricing until reducing in the last hour or two and arrange with some local care charity to give the remnants to the homeless?
Unfortunately this is a common business dilemma and it usually doesn’t have the charitable option available. The classic example is selling ad space towards a print deadline: slash prices (sometimes to zero) or increase copy against advert ratio.
Phoning clients telling of ‘super one-off deals’ makes it incredibly difficult to go back next month with an invigorated rate card. Even though the timeline has changed will the client understand today’s price is 300% more than last month’s offer? All the more so as the clients now believe they’ve done the advertiser a favour and got them out of a jam.
M&S have been playing this card recently with their 20% off days but if they keep repeating this it makes the non-20% days much harder to carry and justify. They’re educating consumers to find bargains.
This is going to be a huge dilemma for many in the Q1 squeeze that’s coming. Then again, with PWC estimating that 82% of retailers discounted goods the weekend before Christmas, are there many retailers who think we’ll get back to full pricing any time soon?