On the third last Friday of November Americans celebrate a shopping phenomenon called Black Friday. Over the years Black Friday has spread to other countries such as the UK and last year in South Africa it was introduced in large supermarket chain stores. Consumers went crazy for bargains and the crowds at some outlets was overwhelming with shoppers scared of entering into the fray. But those who couldn’t resist a bargain came away with some great specials.
The popularity of Black Friday and other special promotions shows just how hungry consumers are for buying product at knocked-down prices. Many will buy as many of the bargains as possible. They work themselves into a buying frenzy and it’s understandable because we don’t often see such deep price cuts.
How would you run bargains and specials in your small business?
For the small business owner who doesn’t have the buying muscle of the giant supermarket chains and other large retailers it is difficult to find deep price cuts in products to pass on the benefit to consumers. But it may be worth your while to buy in certain reduced items and sell them at cost to bring feet into your store. Just imagine if you could have a special once a month. It may do wonders for your small business. Online retailers can also do the same.
The other day we found a small factory outlet was selling soles at a low per kilo gram price that was close to half of what you normally buyer at fish shops and fish counters in the supermarkets. The owner of the small factory outlet only had limited quantities so we were only able to buy 2 kg of fresh frozen sole. At the price he was passing on to the consumer, it would have been worthwhile to buy his entire stock.
In these rough economic times, consumers will appreciate almost anything with a reduced price. If you want to improve your cash flow, you may want to reduce stock that has been sitting on your shelves for a long time and not moving. Getting rid of such dead items as soon as you can will help put money back into your bank. It’s also worthwhile remembering that these days it’s best to go for fast moving products and limit your range. I spoke recently to a small perfumery owner who explained that she had cut back on slow sellers by reducing prices of the stock she had on hand and using the money to stock up on fast selling perfumes.
Bargains are great for exciting customers but you need to find a way to reward existing customers rather than bargain hunters who hop from one retail outlet to the next. It’s better to use a bargain or special promotion strategy as a customer retention tactic rather than just to create excitement. Ultimately, profitability which in the most basic sense is revenue minus costs depends on increasing sales. But you have to make up margin on other products and services you sell so that your overall profitability of your business stays financially sound.