The truth about sales lies in your customer.
Jewelry lore has it that if you sell high-end jewelry, you should never be “on sale.” But the truth is more nuanced than that. Being a merchant requires managing products at all stages of the product life cycle, and the sale remains a powerful way to move end-of-life cycle inventory.
True or false: If you acquire a buyer on sale, he will always expect to buy on sale.
Mostly true. Some people are on-sale jewelry buyers; some are opportunistic, grabbing sales when they can but not waiting for a sale if they can’t; and some folks are full-price jewelry buyers. When you acquire a new customer with an on-sale item, his long-term response has more to do with the value that person places on jewelry than the fact that you were on sale when he first encountered you.
But our first impression of a brand sets our perception of the brand itself and it also sets our value thermometer. So the risk of acquiring a customer on sale is that you might establish a value perception for your store that is lower than what that customer might typically expect to spend.
So be prudent about where you advertise and market being on sale. For example, if your core customer is a weekend section newspaper reader who has proven to be a full-priced buyer, don’t advertise your sales in the weekend section. Do share your sales with your best customers, but use a different medium — like email — for sale promotions. That way you don’t risk attracting new, potentially full-price buyers in the weekend section, thus turning them into on-sale buyers.
On the other hand, if you’ve tried a different advertising medium and failed to find the right kind of new customers with it, but did find a few customers for your lowest priced items, perhaps you should advertise your sale in that venue. At that point you’re not looking for a new, full-price buyer; you’re looking for a sale buyer to help you clear your inventory.
True or false: If you have regularly scheduled sales, people will wait for those sales to buy.
This is a bit of a trick question. Your sale buyers will wait for sales, because that’s the only way they’re going to buy your jewelry. Your full-price buyer will buy whenever she is moved to. She’ll definitely take advantage of a sale when she can, but won’t wait for a sale if there’s something she needs or wants.
It’s your indifferent buyers who will learn to wait for sales. So the big question is, how many indifferent buyers do you have?
If you have a strong core of brand loyalists willing to buy at full price, then you can probably get away with having a regular sale once or twice a year. But if your following is mostly indifferent, then having regular sales could lead to a very negative selling cycle in which everyone waits for your annual or biannual sale and your margins go down the drain.
The bottom line? Don’t be afraid of using sales as an inventory control measure. Instead, manage your customer relationships, marketing and messaging to maximize sale benefits without creating unwanted consequences.
Andrea Hill is owner of Hill Management Group, with three brands serving the jewelry industry. Learn more at hill-management.com.
This article originally appeared in the April 2017 edition of INSTORE.