June 21, 2017

How the DIY sector can remodel itself with creative sales promotions

“There’s plenty of room for improvement in the DIY sector’s approach to sales promotions” says Andrew Marwick, Managing Director, Opia.

Often referred to as a ‘seasonal sector’, the £38 billion DIY retail sector has the unique ability to rotate its products and offerings to suit different consumer needs from season to season.

Sales may tick over throughout the year with, but DIY and home improvement retailers must consider effective ways to secure sales of high-ticket items such as power tools, lawnmowers and hardware to boost sales figures during the slower months.

Discounts are the current go-to solution for so many retailers.

But the risk in discounting products to drive sales lays in the fact that consumers are only likely to buy discounted premium goods while they are on offer, and when prices are reverted back to the usual RRP, customers will not purchase the product until it is discounted again or will seek out a better deal elsewhere.

This ‘boom-and-bust’ cycle is one of the major pitfalls in promoting premium goods.

In other markets, most notably consumer electronics, cashback promotions are proven to drive sales by increasing footfall and inspiring consumers to make impulse purchases.

Brands can yield a healthy return through the use of smart promotional mechanics such as cashback, increasing sales by promoting a benefit near-enough identical to a price drop, without the risk of falling into the ‘boom-and-bust’ cycle.

How exactly does a cashback promotion yield a better return for the retailer, yet appear as attractive as a discount promotion to the consumer?

The answer lays in the disparity between consumers who purchase the product and claim the cashback after a specified time period, and those who don’t.

Creating and executing the promotion end to end, Opia manages the risk for the brand or retailer by charging a small fixed fee for every product sold during the promotion. Through predictive analytics and insurance placed through specialist brokers, the risk to exposure is capped.

For the brand or retailer, this guarantees an uplift in sales and additional margin through the lower cost of cashback and reduced downward price pressure.

By considering the size of the reward against the price of a product, redemption rates can be predicted. This difference allows retailers to offer seemingly higher cash rewards, in the knowledge they will not pay out on every purchase.

It’s natural that reluctant businesses would weigh up the uncertainties of such a promotion, but through partnerships with experienced sales promotions experts, retailers can deploy risk-managed promotions built upon predictive analysis with guaranteed fixed costs.

Such promotions have proved to be successful in the automotive, consumer electronics and software sectors, so there’s no reason why the DIY sector can’t benefit too.


Andrew Marwick, Managing Director, Opia