It’s time to come out of the closet. Call us cheapskates if you
like, but the Cassidy clan are suckers for sales, discounts and
money-off coupons. It probably began out of need. Money was tight when I
was a child and once or twice a year my mother came back from the local
department store laden with quality clothing or bedding in appalling
colours.
’How much?’ she would yell, modelling her latest find, usually in a
shade of beige that time forgot. ’Two pounds,’ we would yell back for
sport, knowing that she had paid at least a fiver. We finally weaned her
off pushing and shoving in the Blue Cross sales when my brother refused
to set foot on the beach in matching Bermuda shorts and shirt. He was 26
at the time.
Even the royals aren’t averse to a bargain. Didn’t we laugh when one of
the tabloids recently told how a party including Princess Anne booked a
less-than-regal lunch at a country restaurant, and duly produced the
appropriate coupons clipped from a local newspaper?
So next time the Princess needs a new tumble dryer, expect to see her do
what we did last weekend and turn up at Comet armed with a voucher
giving an extra discount off the store price. Such offers have an
advantage over general price promotions in that they segment the market.
When times are good, there’s less need to offer everyone cut prices
because potential buyers are already through the door. It’s efficient to
offer reductions only to those who insist on them.
National newspaper circulations conclusively prove that, in the long
term, most price cutting is a waste of money. Price promotions are like
drugs: fun to start but the devil to stop. Brand managers probably know
this, but they have targets to make and can’t help it.
It was interesting the other day to hear the supermarket groups batting
away the outrageous suggestion that they might not have passed on the
full benefit of recent falls in the world oil price at their petrol
forecourts.
The cycle is typical. Having increased their market share, the grocers
may well be content with a lull, until someone breaks ranks to resume
hostilities.
When it comes to fast-moving consumer goods, whoever initiates discounts
probably will reap immediate benefits. Customers buy more and retailers
offer more space on the shelves; they like the extra sales and the edge
they can offer over a competitor.
The trouble is, when consumer sales are healthy, some of the extra
discounts offered on a brand may be pocketed by the retailer, rather
than be passed on.
Never mind the stores mining all that EPOS data, it’s brand owners who
may benefit from contrasting the value of goods discounted to stores
with the quantity discounted by them. In some cases, it might show brand
promotions money is better spent in other ways.
But as for freebies, count me in. And if anyone has got coupons five or
nine from The Mirror, then let me know. At this rate, we’ll never get
that free Del Boy video from HMV.
Nigel Cassidy is business correspondent of BBC Radio 4’s Today
programme.
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