DIY spending reached a seven-year high of nearly £6 billion in 2016 according to Lloyd’s.
In this seasonal sector, home and garden improvements are very much weather-dependant. As UK summers become increasingly unpredictable, DIY retailers must explore new creative ways of moving high ticket items off the shelves and into the boots of customers’ cars.
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.
The ‘sausage sizzle’ is a regular event at any Bunning’s branch as the Australian DIY retailer begins its Homebase takeover here in the UK, but when it comes to compelling customers to make a high value purchase, there is one method that is far more effective than filling a store with the aroma of frying onions and that is a compelling market disruptive promotion, or something as simple as a risk managed cash back.
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.
According to a recent OnePoll survey, confidence in cashback deals has seen them become consumer’s top alternative to price cuts.
Risk managed cashback promotions.
With a risk managed cashback promotion, retailers can be protected of any over exposure to their P&L by paying a small fix fee for every qualifying product sold out during the promotional period to a specialist promotional company.
This is where Opia steps in.
As a specialist risk managed sales promotions agency, Opia will create a compelling end to end promotional solution, which will meet the client’s challenges, works within their budgets and deliver a compelling proposition to drive sales.
By creating and managing the promotion end to end using a 100% inhouse team, Opia manage the risk through insurance placed with underwriters at Lloyds of London.
For the brand or retailer, this means an uplift in sales, as the consumer is enticed by the cashback reward on offer at the point of purchase, without eroding their margins by reducing downward price points.
By paying a small fixed fee on all qualifying sales out, the retailer or brand avoids exposure to their P&L from an over-subscribed campaign.
An experienced industry partner, like Opia would always recommend a risk-managed sales promotion which they underpin through over 20 years experience and using predictive analytics and specialist insurance underwriting.
There is much value to be found in these promotions for DIY retailers considering 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.
Matthew Wallis, Sales Director, Northern Europe, Opia