| 07 July 2010 | |
Discount to ten |
Back |

Editor Andrew Davies on whether discounting helps or hinders the KBB retailer...
In the years I've been studying this industry I've seen many long running trends become more and more significant. Some of them are style trends - open plan living spaces in the kitchen and wet rooms in the bathroom, for example, and some of them are business trends.
These are particular apparent in the relationship retailers have with their suppliers - it has changed immeasurably in the last ten years. This has been driven by several factors, namely the internet, the recession, consolidation of supply and lots of others, but it has been very interesting to watch how much more suppliers, especially those that supply strong brands, are involving themselves more in the running of independent showrooms.
And whether you see that as annoying encroachment or about-time-too help is what is probably dividing retailers.
This involvement grew from specifying display space, this is not new of course, but that became helping to design the displays, that then became 'we can help you design your showroom'. This is all fine, and if a manufacturer has invested in the marketing and image of a brand then it's not too unreasonable for them to want some say in how it looks in the showroom - providing the terms and conditions are mutually beneficial of course.
The conversation now seems to be moving on to the much stickier topic of pricing - in particular what price the retailer is selling those products to the consumer. The differentials in the prices retailers can buy from suppliers is a thorny issue in itself, and it's the internet that's sparked that, but now there are manufacturers who are getting a bit annoyed about the discounting that retailers have employed for years to close a sale.
I've had several conversations with manufacturers recently that have all involved the subject of recommended retail prices. They're popping up in brochures more and more too.
Suppliers can't tell retailers what price to sell it for, but I've spoken to several who just want the retailers to display RRP so the consumers can see what the actual discount is.
Retailers, of course, use discounting of some description as a very valuable sales technique to get punters in the door, get them on the hook and reel them in. As Bill Pnaiser says in this Talking Point "In the real world, we sell a £25,000 kitchen, make a 30% margin, then find the customer can only afford £20,000. What do you do then? Do you cut your margin or tell them to go away?"
But this leaves the manufacturer scratching their head and watching their valuable brand sold for much less than they'd like.
What's your view? Is discounting an inevitable part of retailing, or if you're a supplier do you think retailers undersell your products?
What do you think? Email the editor



