There are many tried and tested methods of increasing sales, whether it be through product discounts, multi-buy options or even increasing footfall by luring customers into store with the promise of free sausages.
Yes, the ‘sausage sizzle’ is a regular event at any Bunning’s branch, but as the Australian DIY retailer begins its Homebase takeover here in the UK, fellow DIY retailers need to explore creative new ways to compete for those seasonal sales figures.
No matter what the season, and no matter how unpredictable the UK weather becomes, evolving interior and exterior design trends continue to inspire homeowners and renters are to spruce up interiors and revive their outside spaces.
Retailers in the DIY sector need to attract consumers to higher priced items to secure healthy sales figures in the sector’s strongest time of year.
Although applying temporary discounts is clearly the most popular method for increasing sales, it is not the most effective.
Consumers are unlikely to purchase products that were previously discounted but have been returned to their usual selling price, preferring to seek out a better deal elsewhere or waiting instead for the product to be discounted again.
Retailers can easily slip into this ‘boom-and-bust’ culture, re-applying discounts just to secure sales, which is ultimately damaging to profit margins.
Cashback promotions are proving to be a strong alternative in other sectors where retailers want to secure stronger sales of premium goods.
Increasing footfall and persuading consumers to make impulse purchases, cashback promotions enable retailers to make a healthy return on higher priced items when operated with a set of smart promotional mechanics established by a risk managed sales promotions agency such as Opia.
For the consumer, the cashback promotion presents them with a savings opportunity near-enough identical to a price drop and for the retailer, increased sales are achieved without the risk of falling into the ‘boom-and-bust’ cycle.
This relies on a certain mechanic; the requirement for the customer to claim the cashback after a set period of time.
Opia has the expertise to safely manage the profit and loss of the promotion by calculative the risk to predict accurate redemption rates and placing insurance through a specialist broker.
Ensuring that the disparity between the number of consumers who purchase the product and the number of consumers who actually bother to claim the cashback falls in the favour of the retailer.
The number of consumers redeeming the cashback offer will always be lower than the number of consumers receiving a discount the instant that they purchase, thereby allowing retailers to offer seemingly higher cash rewards without actually having to pay out to every consumer who purchased the item while the offer was applied.
Cashback promotions have proven to be successful with many brands and retailers across various sectors including automotive and consumer electronics, therefore there is much value to be found in these promotions for DIY retailers looking into ways to bolster the sales of power tools, lawn mowers and other such high priced items, and with the analysis and insight provided by a risk-managed promotions agency, great results are easy to achieve.
Andrew Marwick, Chairman, CEO, Opia