Rolling for Initiative is a weekly column by Scott Thorne, PhD, owner of Castle Perilous Games & Books in Carbondale, Illinois and instructor in marketing at Southeast Missouri State University. This week, Thorne looks at the perils created by frequent sales.
Several anticipated new releases hit the shelves this week. The long delayed Dungeon Crawl Classics RPG from Goodman Games finally arrived. As thick as the Core Rulebook for Pathfinder, the DCC RPG comes in at a thick 460 pages, with another dozen or so at the end of advertising material for only $39.99. I didn't know what to expect in terms of sales, since we had no pre-orders for it but have already sold out of half our initial order, which bodes well.
Also arriving, from Paizo, were the Buff Deck and Giants Revisited handbook, both of which sold quite well upon release, though the Buff Deck didn't have nearly as many illustrations of well-muscled people as I expected. Compared to sales of their Misfit Monsters Redeemed book, Giants Revisited sales are incredible.
Scott Palter, who helped start West End Games and currently runs Final Sword Productions and works with Ad Astra Games, recently pointed me towards an interesting column on MSNBC's website on the problems J C Penney has had trying to implement its "fair and square pricing" plan. Quoting from the column: "No more coupons or confusing multiple markdowns. No more 600 sales a year. No more deceptive circulars full of sneaky fine print. Heck, the store even did away with the 99 cents on the end of most price tags. Just honest, clear prices." Essentially, JCP announced an end to sales, coupons, BOGO and deceptive worded flyers. Just good clear pricing.
What happened? Revenue dropped 20%, customer traffic down 10%. Penney's made $64 million in the first quarter of 2011, but lost $163 million during the same period this year. While the economy still isn't doing great, we haven't seen enough of a change in it to attribute Penney's loss to that. The column's author, Bob Sullivan, says the only change JCP put into place, alongside a new advertising campaign featuring Ellen DeGeneres, was plain pricing, which customers apparently hated. People say they want to know how much an item costs, except when you tell them. Customers liked the 600+ sales per year JCP ran as JCP trained them to look for a new sales circular twice a week, with half off pricing, 25% off coupons and other indicia that a customer didn't have to pay the full price on a product if they would just
wait a week or so. Macys' stores that shared the same mall with a JCP that had implemented the new pricing policy reported sales increases of 5 to 20%. Customers not wanting to change their behaviors instead changed over to a store that still offered confusing discounts, multiple sales, deceptively worded circulars because that was familiar to them. Stores that have trained their customers to expect not to pay the MSRP on products will find it very hard to all of a sudden to have to train them in different shopping behavior. J. C. Penney may recover those customers it has lost by promoting other aspects of their store, such as merchandise selection or customer service but it will take quite a while and I expect, due to the focus of most corporate retailers on the short term and stock prices), that management at J. C. Penney will opt for the easy out and abandon "fair and square" pricing for a more robust bottom line.
Competing on price looks easy to do and it is (as long as you are willing to see a reduction in your profits), but your customers are creatures of habit. Once you get them trained to expect discounts off MSRP on your products, it will prove very hard to get them to shift back. It is far better, especially for a small store, to differentiate yourself through other things than price.
The opinions expressed in this column are solely those of the writer, and do not necessarily reflect the views of the editorial staff of ICv2.com.
Column by Scott Thorne
Posted by ICv2 on May 27, 2012 @ 10:33 pm CT
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