Tuesday, November 24, 2009

Retail Discount Pricing

We manage both a retail tea shop and wholesale tea distribution business. In both ventures, we find continual challenges in analyzing sales data to identify price sensitivities and appropriate price points. This holiday season, in particular, brings with it a very astute, savvy consumer who wishes to confirm value above ultra-premium, short term sparkle.

Tea is in a unique position as a consumable. No matter the cost, it will be consumed over time, with a very moderate per cup price. What helps establish a higher price point is a shared appreciation between the buyer and seller - an appreciation of both what makes a tea special on paper and how it cups over time. While the buyer will only keep a few essential facts in mind when enjoying a tea, it is really the repeat, reaffirming cups that will keep the buyer loyal. And frankly speaking, loyalty to a seller's brand or reputation is what offers greater variability in discretionary pricing.

When we do guided cuppings in our store, we always have the goal of giving the customer a positive enough experience that they will return. We try our best to build loyalty over the long term. That loyalty is personal and long lasting - we believe it is much more forgiving than the disappointment from purchasing a "grocery branded" off product.

So in our desire to offer 10%, 20% or even greater discounts to bring customers in the door, we will do that by demonstrating our compassion for our clients and our commitment to serving our tea community in the long term. The greatest challenge now facing a retailer is knowing this has been a difficult sales year and yet looking primarily at discounts as a core motivator for the consumer to act now.

The day after Thanksgiving is really about the big box retailer. What small business retailer would want to open at 4am anyways?!!! Nevertheless, we do share in the trying times with our clients and we are kicking off this holiday season with broad based discount programs at both Infusions of Tea and Kopius Teas. We hope our clients will take advantage of this sales opportunity, as wholesale prices will most definitely increase early 2010. 

We wish everyone a joyful and loving Thanksgiving. For us, we are most grateful for the single day off we will have before Christmas!

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