sdd

Retail Strategy Secret #5: SDD

Welcome to the fifth post in our series of “Retail Strategy Secrets”!  Here you will learn the angles, approaches, and tactics retailers are using every day to try and separate you from your hard-earned cash.  Understanding these unlocks the door to spotting great deals, and you never want to pass up a Dealicacy…

SDD

No, I didn’t mean to type “A-D-D”… although I think that consumer ADD (Attention Deficit Disorder) could make an entire future post.  SDD is far from it, and actually recognizes that customers are paying attention.  Either way, you’ll definitely want to pay attention to this post! 🙂

SDD, which stands for “Steadily Declining Discount”, is a somewhat new concept with its structural roots found in Hi-Lo pricing.  Most items at an SDD retailer are offered at average to above-average prices, and everything gets started with a big sale.  However, the difference is on the back-end: instead of the price immediately returning to standard after the sale ends, it gradually increases over time back to its original level.

For the most part, SDD exists to smooth out purchasing volume of an item over time (as well as to increase the item’s profitability).  After the initial /major sale period, another promotion on the same item or category is done – just to a lesser extent.

Consider it this way…

puf

Retail Strategy Secret #4: PUF

Welcome to the fourth post in our series of “Retail Strategy Secrets”!  Here you will learn the angles, approaches, and tactics retailers are using every day to try and separate you from your hard-earned cash.  Understanding these unlocks the door to spotting great deals, and you never want to pass up a Dealicacy…

PUF

An acronym that stands for “Profit Up Front”, PUF is the act of requesting (or requiring) some payment up front before allowing access to products offered at potentially lower than average prices.  This pre-payment assists with profitability of the retailer, and is implied to make it possible to provide such low prices to the consumer.

PUF came into the mainstream sometime around 1980, and frequently presents itself in the form of paying a fee to becoming a member or buying an annual membership to a given retailer. The concept became entrenched when wholesale and warehouse clubs began to expand across the country.

Now you know somewhat why…

Hybrid Pricing Model

Retail Strategy Secret #3: Hybrid Pricing

Welcome to the third post in our series of “Retail Strategy Secrets”!  Here you will learn the angles, approaches, and tactics retailers are using every day to try and separate you from your hard-earned cash.  Understanding these unlocks the door to spotting great deals, and you never want to pass up a Dealicacy…

Hybrid Pricing

On a basic level, Hybrid a mix of Hi-Lo and EDLP. Simple, or is it?

You will be able to detect a Hybrid retailer pretty easily.  In fact, it is rare today to find *anyone* that is purely EDLP or Hi-Lo.  It makes it much too simple for deal-seekers and even everyday shoppers to figure out.

Wal-Mart is a Hybrid.  They just “lean” toward EDLP.  Not convinced? …

Every Day Low Prices (EDLP)

Retail Strategy Secret #2: EDLP Pricing

Welcome to the second post in our series of “Retail Strategy Secrets”!  Here you will learn the angles, approaches, and tactics retailers are using every day to try and separate you from your hard-earned cash.  Understanding these unlocks the door to spotting great deals, and you never want to pass up a Dealicacy…

EDLP

EDLP stands for “Every Day Low Pricing,” a model that consistently features items at average to lower-than-average pricing. Most notable about EDLP is that items seldom, if ever, go on sale.

For the most part, retailers following EDLP will tend to advertise categories of items, featuring those who list at a price comparable or better than what can be found elsewhere.

Commonly found in …

hilo

Retail Strategy Secret #1: Hi-Lo Pricing

Welcome to the first post in our series of “Retail Strategy Secrets”!  Here you will learn the angles, approaches, and tactics retailers are using every day to try and separate you from your hard-earned cash.  Understanding these unlocks the door to spotting great deals, and you never want to pass up a Dealicacy…

Hi-Lo Pricing

First, let’s clear the air – this retail strategy doesn’t have anything to do with card games and wasn’t derived from any ancient wisdom from the Hawaiian islands (despite the cool waterfall picture).  Hi-Lo pricing is the practice of offering significant discounts on selected items for a limited time period, while the other available items continue to be offered at standard or above-average markups.

In essence, retailers following “Hi-Lo” will tend to …

grocery isle

Is it Possible to Bargain Shop at Whole Foods?

Whole Foods is one of many specialty stores out there that position themselves at the high-end (premium) portion of the market. They use buzz-words like “organic”, “green”, and “sustainable” and do their best to cater to your convictions while separating you from your cash.

At Dealicacy, we know two things:

  1. Whole Foods is not typically a source of great deals – it is quite pricey to shop there, and
  2. It sure is fun to go shopping there to try all the samples.

Today I would like to recommend an article that was written by someone with a heart similar to ours. Myscha Theriault has put some thought around how to find some great deals at Whole Foods.

Take a look at her twelve ideas and take some mental notes. These tactics are often transferable and definitely not limited to Whole Foods.

Until next time,

– Nathan

PS – Don’t forget to sign up for the Dealicacy newsletter! We *just* sent out an exclusive Dealicacy to our members that got them in on a deal netting 85%+ off of retail… for a highlyrated digital camera!

Donut Holes

Donut Holes: Dollars Off vs. Percent Off

Welcome back!  Today we’ll cover how to make sure you get the most out of “pick your sale item” (20% off one item) and “dollars off with minimum purchase required” coupons.

Bed Bath and Beyond seems is always sending something to our family. It seems that on alternating weeks they drop a bunch of “20% off one item” coupons into the mail, and about once a month they route a nice seasonal ad with a “$5 off” coupon on the back. The fine print on both of them isn’t too bad either…

bogo

Why BOGO is Typically A No-No

Let’s take a peek into BOGO: “Buy One Get One” offers.

Shoe stores are great at this. A couple of “Famous”-type chains tend to have a seasonal BOGO sale. Lately I have seen this a lot, perhaps due to economic times. Buy One, Get One… Half Off, or maybe even a Buy One, Get One Free.  What a deal! Or is it?

Well, it largely depends on if you need two pair of shoes, but we’ll get to that later. In the mean time, you need to realize the main theme going on here:

back_away

Back Away… Slowly… (Not All Deals Are Created Equal)

Get back in your car, close the weekly ad, put down the scissors. You only think you are getting the best deal this week.

Of course, you could be right. It could be a great deal. One not to be passed up. But are you simply lucky, or two weeks from now (just outside of the pricing policy terms for adjusting your purchase price) will you be feeling sick to your stomach?

From what you know by reading your introductions to Dealicacy (All I Got Was The Fine Print, The Biggest Money-Saving Secret), the only expectable outcome of any deal or sale — profit — goes to the retailer. Regardless of what price you paid, you spent money and the seller received it. No matter how much you “saved”, you had to spend your money to get those “savings”. So take a big step back and wait a bit. Given that deals, sales, and the like tend to recur, patience is a virtue and truly the biggest weapon in the consumer’s toolbox.

This is closely followed by…

fine print

Nearly 10 Years in Corporate Retail And All I Got Was the Fine Print

Ok, I admit it. My first job out of grad school was a stint in retail. Not a cushy job either. I was part-time store employee at a large, nation-wide retailer.

I felt like I had done something wrong. How could this happen – I had an MBA in hand from a ranked school for goodness sakes! Well, it helped me to remember that it was literally *right after* 9/11 that I got hired, and just a few ugly months into the dot-com crash. I ultimately decided to give the foot-in-the-door approach a try.

It worked. 5 months later, I was up at Corporate riding high on a major promotion, and I will NEVER regret the approach I took. I got a first-hand look at the line level that very many of my peers (and superiors) never had. Don’t get me wrong, the first job sucked. BUT it afforded me the opportunity to pay attention in detail to what was going on, match it to my book-knowledge, and in short form match the how’s and why’s from the control center.

Nearly 10 years later (upon leaving for a better opportunity in a different industry) I realized that I got something out of my experience that many people seem not to: the fine print. The gray areas. Understanding of why some items can be returned and others not, all about drive times, outsourcing, how inventory moves, what actually makes money. The good stuff!

This bodes well for you. Remember, the ultimate purpose of retail (and all business, really) is not to provide you with the latest and greatest, it exists to separate you from your money.  It’s an equation of sorts: a given amount of business should yield an expected amount of profit. Thus occurs an endless rollout of promotions to draw you in, each meticulously calculated out to yield a predetermined amount of profit based on sales volume and gross margin. The good news here?  These promotions are ultimately (and sometimes frequently) repeated and thus predictable. Retailers just sprinkle on the urgency of “now” to draw you in.

So what does this really boil down to? As you might have already guessed (or have a gut feeling about), because of this “formula”, the changing and different needs of each consumer, and the desire for growth from a company’s shareholders, all deals are NOT created equal.  They just create a predictable result. Coupons are different than financing, but both create a similar result in revenue and profit. Rebates and sales, same story. Special incentives and clearance, ditto.

Dealicacy’s promise is to keep you informed, grow your retail intuition, and provide you with the tools necessary to filter out the great deals from the good. In short, watch out for what’s best for you by reading along here.

Enough with background, introductions and purpose — Now we can start getting to the good stuff!

Enjoy,

– Nathan