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14 March 2011

Discount the cost

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Retailer Richard Hibbert says instant discounting can only damage a company longterm...

Any debate about discounting is great. I hate this time of year because of sales from the sheds that claim 50% or more off.

We have always been a company that works hard to sell the product, from showing real room sets, to strong design and excellent product knowledge. We do not have a January sale.

The problem, as you have explained, is that lots of businesses are struggling and don't want to let a customer go without getting the deal done. We do drop close when necessary and, on supply only, give away a small discount, but we always sell the service that the customer receives.

We do come up against customers who are solely looking at price and when another retailer is giving 20% off we are expected to match this. Giving away 20% for nothing is giving away the profit for nothing. More people need to sell the quality and service rather than just give 20% or 25% discount.

I have been into showrooms lately and seen sales designers do a really good pitch that has obviously impressed the customers only for them to say: "We also give 20% off all those prices." I really don't get the point of giving discount for the sake of it.

Recently my Dad went on a manufacturer's jolly (sales trip) and all the other retailers were asking each other how much discount they gave. They were saying 20-30% straight off. When asked why, all of them said that customers expected a discount or they would just go elsewhere.

Over the years, I have quoted against the big high-street multiples and have still sold the job even though those companies have 50% off and no VAT to pay.

How can that be when I could never afford to give that amount of discount?

I once sold three bathrooms to a lady for around £37,000. At the same time, one of the multiples was giving a 50% discount and she had a quote from them that came out at around £70,000 - and this already included a 50% discount.

We put so much effort into making sure our installations are done to the highest standard and that our customers feel they have had excellent service from knowledgeable people, only for the industry to be giving margins away without having to work for it.

Richard Hibbert, sales director, The Kitchen Showroom Ltd, Sudbury, Suffolk