Trade thoughts: Is discounting the post-lockdown solution for mobility retailers?
After months of slow or no trading for the mobility retail sector, many dealers will be considering how to shift unsold stock and secure much-needed sales following lockdown.
One option that some in the sector have turned to is discounting and running sales as a means of reviving trade, grabbing customer interest and obtaining a much-needed cash injection, but is it the right move?
THIIS asks five retail leaders whether discounting will do more harm than good in the short- and long-term after the lockdown.
All thoughts were submitted to THIIS in June 2020…
Matt Mohr, Managing Director of Kent Mobility
“Under the current circumstances, discounting may be an effective short-term tool. However, as a general rule discounting certainly isn’t something I favour unless it is warranted by a customer buying a significant volume or some other exceptional reason.
“With respect to sustained and ongoing discounts that form part of a promotion or permanent pricing structure, these can potentially be matched by competitors and therefore neutralise any advantage and, more importantly, there is the increased pressure on margins. Then there are more intangible issues like customer perceptions.
“Retailers in the market occupy different positions in respect of what they offer and understanding this is also key to appreciating the importance/necessity of discount. Here at Kent Mobility, we offer high-end products with high levels of expertise and service. We want our customers to appreciate and understand this and therefore we would be reluctant to discount unless there is good reason. However, needs must and these are difficult times and if a little discount secures an order then so be it.”
Mike Williams, Managing Director of Ableworld
“I would say yes!
“Many retailers, including ourselves, have a lot of stock and suppliers’ warehouses will be bulging so I think it is important for the industry that we work together to get the products to the customers at even better prices.
“Customers will obviously appreciate the discounts and it allows us to clear some of the backlog to help everyone in the supply chain.
“We always start our summer sale in July so we have some incredible discounts across many of our ranges as customers will be starting to shop more once high streets start to get back on their feet.
“Luckily, we had a steady flow of customers throughout lockdown who were all happy that we were available to help them so we created customers for life while many others were closed.
“Good value for money, range and honest advice for mobility equipment will always be what customers want. This is what we have always offered, rather than making money by selling unethically, selling products that need assessment online or selling at inflated prices and taking advantage of vulnerable people.”
Alastair Gibbs, Managing Director of TPG DisableAids
“I have never been a great believer in discounting as a means to increase business for a number of reasons.
“The most important of those reasons is the lack of appreciation of what happens when you discount.
“If you choose to discount by say 20% of the normal selling price, it has to be realised that all of that 20% is from your dealer margin and not from the total.
“If a dealer would normally sell a boot scooter for around £900 and it has cost around £500 to buy, a 20% discount will reduce the margin from £400 to £220 – a 45% reduction in margin. This effectively means you have to sell two scooters to be in the same place you were before discounting. You are now making less than 25% gross margin but still have all of the costs of sale, delivery, warranty, order processing etc to cover.
“It is not difficult to see that unless you can more than double the number of customers, you will actually be worse off.”
Karen Sheppard, Managing Director of People First Mobility
“Mobility scooters that were in the showroom at the start of the lockdown are now an extra three months into their warranty. Will suppliers honour another three months?
“If not, then retailers will have to fund the warranty for three months themselves or discount the scooters and sell as ex-demo with less warranty.
“Offering cheaper prices means they can then be turned around quickly to bring in some cashflow and allow new stock to be bought into the showroom.
“People will be looking for bargains and I think people are ready to spend. Those who are shielding may be on PIP etc and therefore their money has not decreased during lockdown so they will have funds that they haven’t been able to spend available for purchases now.
“Manual wheelchairs and daily living aids don’t have the same warranty issues so these could be sold at the normal price. However, getting cash flow back up and money coming in will be important, so judgment will have to be made on whether more sales can be achieved by offering some special offers and deals.”
Lauren Bromfield, Director of Classic Mobility
“For us, discounting items will not be the answer following lockdown. It’s so important when working in this industry to provide a good service to ensure our clients receive quality products that suit their needs.
“We are always well priced, and will continue to be, but we will never try to compete with online retailers and ‘super sales’. We hope that our clients continue to see the value in the service we provide, rather than focusing on saving a few pounds.”https://thiis.co.uk/trade-thoughts-is-discounting-the-post-lockdown-answer-for-mobility-retailers/https://thiis.co.uk/wp-content/uploads/2020/07/sale-shop-sign.jpghttps://thiis.co.uk/wp-content/uploads/2020/07/sale-shop-sign-150x150.jpgAnalysis & InsightsNewsroomRetailer NewsTrade NewsTrade ThoughtsAbleworld,Alastair Gibbs,Classic Mobility,Karen Sheppard,Kent Mobility,Lauren Bromfield,Matt Mohr,Mike Williams,mobility dealers,mobility retailers,People First Mobility,sales,TPG DisableAidsAfter months of slow or no trading for the mobility retail sector, many dealers will be considering how to shift unsold stock and secure much-needed sales following lockdown. One option that some in the sector have turned to is discounting and running sales as a means of reviving trade, grabbing...Calvin BarnettCalvin Barnettcalvin@thiis.co.ukAdministratorTHIIS Magazine