Malcolm Scott | COMMENT AND OPINION
MALCOLM SCOTT
OPINION By squabbling about Brexit, we have created a
There is always something that
can be introduced to add value to every sale at every price level. Where a consumer can see a benefit,
there is often an opportunity to
increase the value of the sale
self-induced reduction in overall consumer confidence that will not lift until the uncertainties are made clearer. But life goes on and so business must go on. For mass- market retailers like Tesco, which recently announced 4,500 job cuts at its Extra stores, there is no escape from the ill wind. When unit sales reduce, regaining revenue is hard. For the discount stores selling entirely on price, any downturn in units sold has a huge impact on profitability. If the business formula is ‘pile it high and sell it cheap’, during a downturn revenue must surely fall. Very few kitchen specialist retailers have chosen a high-
turnover, low mark-up sales strategy. Most prefer a strategy of making fewer sales but maximising the value of each one. This is especially evident when you look at the sale of OEM private-label appliances and unbranded sinks by kitchen retailers.
Insinkerator 3N1 steaming hot water tap
Most kitchen specialist businesses have deliberately adopted a strategy of selling big-brand appliances, sinks and taps, which often have more features and benefits and are perceived by consumers as more aspirational. The same trend is evident in the selection of furniture, and in the preference towards solid surface worktops and in the passion for selling hot taps. How do the best retailers hold on to margin and add value when market pressure is pushing so hard in the opposite direction? No one wants to let a good sale slip away for the sake of a few pence in margin, and when footfall in the showroom is low, the temptation to take on work just to keep everyone busy is very real. Every business is
different and must consider what
the strategy is for holding on to these consumers who genuinely have a fixed budget that is within striking distance of the quoted price. The most common strategy is to ‘take a little out of the specification’ – reduce the spec from a full combi microwave to a microwave with grill – the type of change that the consumer might feel is minor, but has considerable cost implications.
Another common strategy is to move ‘down’ a price class on the furniture doors – keeping the layout the same, but moving to sell a less expensive door, or perhaps taking out a glass feature door or the like. This kind of strategy holds margin and might hold the sale. The best retailers operate the same strategy in reverse
to increase the order value where the client can pay for excellence. To sell up, it is essential to have knowledge of the products being offered – staff training and keeping up to date with trends are key. If you want to persuade a consumer to buy something like a Smeg Dolce Stil Novo vacuum drawer, you probably need a display and you certainly need to know that vacuum-packed food retains freshness, aroma and nutrients, and lasts up to three times longer at room temperature or in a fridge. The process kills bacteria and makes marinating food a very simple process. The process is common within many top restaurants,
September 2019 · kbbreview
The WTA industry conference speaker and KBSA corporate chairman on why maximising margins and sales values is critical to survival in a challenging market and suggests some useful add-on sales ideas
Quality not quantity F
because it allows the user to quickly serve very high- quality, moist and aromatic food There is always something that can be introduced to
add value to every sale at every price level – wi-fi-enabled appliances, induction hobs, steam and steam-assisted cooking, frost-free and low-frost refrigeration, pyro-clean ovens, 4in1 hot taps, low-noise waste disposal units, fully accessorised sink work stations, stain-resistant solid surface worktops, in-cabinet storage solutions, smart lighting, wine coolers, fashion-setting new door styles, and so on. Where a consumer can see a practical benefit or a clear aesthetic difference, there is often an opportunity to add value to the sale. There has been a huge increase in OEM private label
products available to consumers in recent years – brands like Lamona, Caple, Teknix, Montpellier, Statesman, JLP, Prima, Essentials, Bush, Cook & Lewis, and Simple Value are widely available to consumers. The bigger retailers have their own brands to try to
reduce competition and improve margins, but as the brands are not known to consumers, they seldom hold value, so the margin may be high, but the pound note profit per transaction is usually low – not much good for a kitchen studio that does not want to ‘pile things high and sell them cheap’. The other OEMs tend to be operated by distributors selling into independent retailers with very similar characteristics – margin can be better, but box values are usually much lower and features are often more basic so that overall profit per sale is often less. Not a very attractive proposition to many specialist retailers. The message in these uncertain times is the same
as ever, keep the sales team well trained, keep service levels up, sell products that hold their value, always try to increase average sales value by offering extras, and if you do need to discount, do this by offering a slightly lower- specification option rather than by cutting the price of a main-line offer. Hold on to profit.
kbbr
or most businesses selling to consumers, these are very challenging times with unit sales down in most categories of consumer goods and the likelihood of price increases that will further stifle sales.
Gaggenau wine cooler 21
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