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David Brown

David Brown: Plug the Discount Leak



Most store owners find it tough to say no to a request for a price break but the effects can be ruinous.

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[h3]Plug the Discount Leak[/h3]

[dropcap capOne of the most important ways to ensure the success of your business is to concentrate on the areas that have the greatest impact. While this seems logical, we frequently see store owners concerned about staff taking five minutes too long for lunch while ignoring the hundreds of dollars in discounts that are being given away each day.[/dropcap]

[inset side=right]When it comes to measuring the amount of discounts a store is giving away, many store owners don’t know where to look.[/inset]When it comes to measuring the amount of discounts a store is giving away, many store owners don’t know where to look. After all, it is seldom reported separately in financial profit and loss accounts. Producing a daily sales report from your system should show you the size of the discounts you are giving away each day.

Many jewelers tend to ignore discounts as they see it as an area that they have little control over; they feel uncomfortable and pressured by the customer and tend to lose control of the situation. However, a few simple steps can be taken to regain control and see the leakage reduced substantially.


[dropcap cap=1.]If a customer asks for a discount, cheer! It means they want to buy it. You have now moved beyond selling and into the area of negotiating. They are a step closer to buying and the game has moved in your favor.[/dropcap]

[dropcap cap=2.]Don’t offer a discount! Fifty percent of your customers will accept it if you explain that this particular item can’t be reduced. This will halve your rate of discounts immediately. Those who won’t accept it won’t walk straight out the door. You have an opportunity to deal with them as outlined below.[/dropcap]

[dropcap cap=3.]Offer an alternative. This could be vouchers (which will cost you less and bring them back in the store) or a discount on an alternative item with more margin, or one that you really want to get rid of.[/dropcap]

[dropcap cap=4.]You’ll be left with the 10-20 percent of hard core bargain hunters by now. Don’t give in right away! Many enjoy the challenge and will, in fact, be suspicious if you give in too easily. Offer a level less than they are asking and many will accept.[/dropcap]

[dropcap cap=5.]You’re nearly there! If they are still insistent, give them what they want (within reason). It is better than losing the sale. But following this strategy and training your staff in this manner will cut the size of discounts given away by hundreds of dollars each day![/dropcap]

[dropcap cap=6.]Discuss the daily discount with the staff. We know of one store that let its staff know the amount being given away each day and specified the amount given away by the heaviest discounting staff member (but not his name). The result was an immediate drop in the willingness of staff to discount and a sizeable reduction in the amounts given away.[/dropcap]


It is a law of nature that you will get that which you concentrate on the most, whether good or bad. Concentrate on reducing your discounts and you will see the results.

David Brown is president of the Edge Retail Academy, an organization devoted to the ongoing measurement and growth of jewelry store performance and profitability. You can contact him at [email protected]

[span class=note]This story is from the April 2010 edition of INSTORE[/span]

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