Times change and along with the time, buying patterns and habits of shoppers will also change. With rising cost of daily living standards, consumers are not what they were before. They tend to be more prudent and calculative of how they spend and what they buy. The end result will be a loss of income for retailers, which will in turn effect the wholesalers.
Lowering Your Profit Margin
To accommodate this change in buying pattern, store owners will have to resort to some changes in order to cushion of the loss of gross income. One popular method, if you are financially strong, is to absorb the lower profit margin. Say for instance, if at present an item cost $30 and you sell at $39 to meet your 30% gross profit margin, keep to that $39 price tag even if the cost of the item has risen by 10 % to say, $33. In this case, you won’t see a 30% gross profit, but look at it this way, you still will be making $6, which is better than making nothing at all. You might even see an increase in sales if your competitor don’t take this approach and sell the item at $42.90 to meet his 30% target.
Lowering Your Quality Of Goods.
Though not a very good strategy it is a workable one if you give more value added services. There are lots of lower quality by still usable goods that you can sell. Say your shop sells pails or cooking utensils or other durables. There are many that are imported from countries from China that are of reasonable quality but comes with a very much lower cost. After adding your 30% the price will be still lower than those similar items.
To gain customer confidence into buying these goods, give your customer a money back guarantee. All of these importers gives you the benefit to replace faulty goods. That’s is an unwritten guarantee that all importers gives. They sells in such big volumes that they are able to absorb all losses incurred for those replacements. I too sells a lot of Made In China padlocks in my shop. These are also available in many supermarkets, but the problem is if bought through the supermarket, it is more of a hassle to get them replaced if it is faulty.
Increasing Your Customer Services
A branded padlock like Yale, cost over a hundred bucks locally. Those Made in China ones cost a fraction if compared with those padlocks from Yale. It sells like hotcakes because if a customer who has bought those padlocks comes back to me in a month of two complaining that the lock is faulty, I replace a new one for them with no questions asked. I don’t loose anything as I can always return those to my suppliers.
The trick is always be truthful with your customers. If the goods are inferior, tell them so. They will have a choice. Place the two types of items together and let them choose. Tell them the good and bad points of each. 7 out of 10 will go for the ones that cost less in these lean times if you give them the money back guarantee.