Continuous Sales Promotions are Bad for Profits

Latest News from the POS & Barcode Industry

Free Expert Consultation

Monday, April 28, 2014

Some observers and analysts of the retail sector of the economy speculate that the constant discounting via various promotions of every segment of the retail business is bad for sales.

This may be the case, but what is absolutely certain is that continuous sales promotions are bad for profits.

Sales promotions used to be along the lines of “Annual Inventory Clearance,” or limited to short events following major holidays.

The retail environment now, however, is that everything is on sale, all the time. The impact of this reality is that profits are down, stores go out of business and consumers are constantly wary of making purchases out of the fear that they may see a lower price after the fact.

Bucking this trend are the retailers, such as Apple, that are shifting to an approach that emphasizes a perception of value and the actual experience of the purchase, as opposed to a strict focus on offering the lowest price. This approach includes tactics that hopefully offer customers something of a value that surpasses a slightly higher purchase price, such as loyalty programs that reward multiple purchases, free gifts and similar techniques designed to convince customers that they are winning and coming out ahead whilst spending more.

Maintaining customers’ interest beyond the initial sale and persuading those customers to make additional purchases is receiving a big boost from the idea of supplying entertainment through game-like activities that offer customers fun activities that appeal to the emotions that run deeper than the simple necessity of a purchase.

An example of this concept would be Buy to Win, where a customer has the opportunity to receive their purchase free of charge at the check-out. Even though the actual probability of receiving a purchase for free is very minimal, wagering-obsessed Australian customers are demonstrating that the concept is a valid one. Anyone who actually did receive an item for free would remember the occasion for a lifetime.

Recent Posts

Point of Sale Systems: Old vs. New
A sale takes place in the store's point of sale system. In the past, point of sale systems was mainly mechanical. The cash registers, the bookkeeping and pretty much everything else is slow and prone

Honeywell Pledges One Million In Aid To Haiti!
Honeywell: World Leading Technology Solutions Company Pledges One Million In Aid To Haiti! As a longstanding partner for worldwide humanitarian relief, leading POS supplier Honeywell recently announced

Gorilla Glass: Durability in Motion
Motion Computing® advances tablet PC durability and sets new industry standards per their October 2009 press release. The Mobile J3400 Table PC and the C5 Mobile Clinical Assistant are now tougher than

Point of Sale Made Easy
In an ever increasing fast page point of sale environment Datalogic Scanning manufactures point of sale devices that with new micro technology can provide more accurate scanning of sales documents using

Motion Computing Simplifies Billing
An announcement has gone out that The Whole Child Pediatrics, who is now using the Motion C5 Mobile Clinical Assistants, otherwise known as MCAs, is experiencing significant improvement in an announcement

New Motorola Customer Fulfillment Center in Penang
Penang, Malaysia is the central location for distributing Motorola products throughout Asia Pacific. The choice of having Penang as the central location for this operation has been crucial in the networking