“You know,” the customer told me, as she stood at the register, “online, you can buy Wellness for 41 cents a can.” We sell Wellness for 46 cents a can, a nickel more. She glared at me. “Are you going to meet their price?”
If you’re a retailer, chances are you’ve experienced this same scene — or something very similar. With the economy the way it is, news outlets all across the nation are encouraging customers to get over any shy side they may have and start negotiating for lower prices. Lower prices on anything and everything, from a new car to cat food. After all, the public is assured, it doesn’t hurt to ask.
The question isn’t painful. But the answer could be — especially if you’re the retailer!
Like many situations you face in your store there is no one cut and dried answer. There are a number of factors that go into the decision to match prices. These include:
Are you a good customer? If I’ve never ever seen you in my store before and you’re coming in asking me to match prices on the loss-leader sale the chain discounter is running, you’re out of luck. I know you’re just cherry picking prices — and once I give you the deal, I’m never going to see you again! What’s in it for me?
Does the deal make sense? I’m not going to drop my prices so much that it costs me money! Let me give you an example.
Years and years ago, there was a store called Edwards. Some of you might remember Edwards — they were the first to run super deep discounts on national products. They were so cheap, they didn’t even have bags! We’re talking real bare bones here.
At the time, we were selling 9 Lives Cat Food four cans for a dollar. A case of 9 Lives cost us $5.50, and we were making $6.00. Not a great margin, but we sell a LOT of 9 Lives.
A customer came in and told me that Edwards had 9 Lives five cans for a dollar. That’s $4.75 a case — less than my cost. She asked if I would match the price.
I couldn’t — and I told her that. So I was absolutely totally dumbfounded to see this same woman over at my shelves, picking out 9 Lives!
I had to ask her why.
Her answer: “They don’t have the flavor I like.”
I told her, “Then when we don’t have the flavor you like, we’re six for a dollar!” She laughed — because she knew the basic rule of negotiation: For a deal to truly be a good deal, both parties have to be happy with it. You’ve got to leave some money on the table — otherwise, the retailer’s never going to go for it! The trick is finding the balance where the customer gets a good deal and you’ve realized at least some profit.
That’s a good negotiation.
Later this week, we’ll be talking about empowering your employees, so they’re prepared when your customers come in and say “What can you do for me?”
