I don’t want to be known as an “always on sale” store!

This is an actual story about the most recent client to ask this question…..names have been changed to protect the innocent!

“I had a great bag made with my logo on it.  My idea is to give it away as a gift with purchase on Earth Day to promote recycling bags.  I’m also thinking of offering it for free for 5th Saturday promotions.  I don’t want to do to sales and discounts. I feel very strongly about the impression that creates about my store. I don’t want to devalue her merchandise and have people just wait until it goes on sale to buy it.
From Amber”

Amber, it’s my job to educate you about the purpose of sales.  They are not all done for the same scientific purpose.  It isn’t about the merchandise – it is about serving your customers and your bottom line!

The purpose for discounts is to create an urgency to move inventory.  A temporary markdown – “All jewelry Buy 1 Get 1 for 50% off” – is done to move specific inventory so that you are not over inventoried (by being undersold) at the beginning of the next month.  The point of permanent markdowns is to move out all old inventory that is not selling at the current price.  It has been scientifically proven that this is the best way to keep your dead inventory moving out and creating cash for new inventory.  We do 2 major markdowns sales a year.

The big Semi-Annual Clearance Sale is about providing the best service to our sales  (also known as our pinkies) because markdowns have a huge impact on their shopping behavior.  Know for certain that your best customers (also known as your thumbs) don’t really care much about sales.  Markdowns do not excessively impact their shopping behaviors.

Finally, Amber – about giving your bag away – I would ONLY do it on Earth Day.  Giving it away for free any other time will decrease the value of the bag.