January Sales - Fact or Fiction

DOES THE PUBLIC REALLY FALL FOR THE 70% OFF FAKE SALES

Ok so it's January again and it's sale time at many of the kitchen retailers.

Now, firstly and importantly, we are not tarring all of the kitchen retailers with the same brush, as there will be some who are offering genuine savings, but we will let you be the judge who you think are offering genuine savings and those who are the subject of this article.

I have only mentioned kitchen retailers, but this could apply across a broad spectrum of services. Any company who advertise in the press, radio or TV declaring savings from their standard sales prices must, by law, be able to back this up. So how is it possible to have continuous sales throughout the year with no breaks. 

Also, while some of them may be giving a genuine discount off their normal selling price for a short period of time, in today's market are there still really members of the public who fall for the 70% off headlines or the 50% discount and take another 15% off if you buy before Monday call to action adverts that are on a continuous loop. The answer is, there must be or the companies that publish these adverts would stop doing these headlines.

How is it possible to have a continual sale, even if you are switching how the sale is packaged ie 40% off and free Appliances for two weeks, then 50% off but pay for appliances, then 50% off and an extra 15% off and then repeat. (I am sure this falls within the letter of the law of the office of fair trading guidelines but not sure it falls within the spirit of what they intended).  At what point are they actually selling their kitchens at the full retail price, being sold across the entire company at the same time and for an extended period. If they do not normally sell at the full retail price listed, this is NOT having a sale, this is inflating prices to an unrealistic starting price.

As my old Grandmother used to say its not a saving off the starting price if the price you actually pay is the same price as you could have bought from somewhere else at their normal price for the same thing. This is why you might get a small saving off a car price but wont see any 50-70% off adverts for cars, as they are easy to compare from dealer to dealer on a like for like basis. If dealer A chose to sell a Ford focus for the recommended ￡15,000 and dealer B chose to sell the same model for ￡50,000 and advertised it with a MASSIVE 70% off discount, selling for ONLY ￡15,000 but save ￡35,000, they would look very silly. 

So in the kitchen and certain other industries, retailers seem to get away with this as it is difficult to compare one kitchen PROPERLY with another. It may also be that some companies want an immediate customer purchase then and there and use the huge discount as a buy NOW gimmick to limit the customer comparing the actual cost compared to a range of other kitchens from different companies. Why is it the public not realise that if they checked out the actual cost of the kitchen they are about to buy with this massive discount, compared to a high quality local independent kitchen retailer, there may be little or no difference in price. However, it may be, the quality could be massively better, the actual design may be superior and the personal service may be just that, PERSONAL.

If we presume a retail selling price of kitchen A is ￡12,000 and after negotiation a discount of around 15-20% is agreed and settle on 17% discount it sells for ￡10,000 leaving a standard mark up of 50% it would have a buying price of ￡6,666 leaving ￡3337 profit to pay for all marketing staff premises and any other costs - a fairly healthy 33% margin, which will allow the company to continue to trade efficiently for many years to come.

In the sale with only a 40% discount, it would reduce the sale from ￡12,000 to ￡7200 but the manufacturer is not going to reduce their price so it all comes off the profit leaving just ￡534 of a profit, on a ￡7,200 sale or a very minimal 7% margin.  REMEMBER this is a 40% discount, if we increase the discount to the 50% shown all over the national press (or more) then the company is trading at a loss. So we must surmise  one of 2 options

1 The big sales headlines are in fact, on over inflated prices, built up to pull the unsuspecting, befuddled, customers into the sales companies spiders web, in the hope of catching them unawares and basically tricking them into buying an over inflated starting price product.

2 that these philanthropic companies are happy to trade at a loss for the good of their customers. 

A recent case study is the now demised Betta Living. We have just taken on a new showroom manager who is a very knowledgeable sales professional for our high end German Kitchen showroom, who was working for Betta Living before they imploded.  He had the figures for their costs for a single door 600 base unit at over ￡1000 but it was always on sale at 70% off, this meant that their sale price of around ￡300 after discount was more than the full retail price of our own Nolte Kuechen, High Quality German Kitchen units. Now far be it from me to imply that the Betta Living product was not of the same quality, but there is a reason why our product was voted the number 1 kitchen manufacturer by the German institute for Quality and Service. However is there really anyone of my readers that truly believes that the Betta Living  unit was worth over 3 times that of a Nolte Kuechen unit at real retail price or is it more likely the Betta Living unit was massively overpriced to start with, with the express reason of showing a huge discount to drive traffic.

To highlight the price differential, in a recent kitchen project we designed our proposal for a German High Quality Nolte kitchen. Our potential client explained that they had a quote from B&Q which we were dismayed at, due to our expectations of the difference in quality, we expected the B&Q kitchen to be significantly cheaper . As it turned out the Nolte Kitchen from Kuechen Harmonie was ￡17,600 fully supplied and fitted and the B&Q kitchen was ￡16,126 (we have a copy of the quotes) with all their discounts applied. A difference of less than 10% for the Number One German Kitchen v a B&Q kitchen. Which one was better value for money we will let you decide, however as you may have guessed the potential client turned into a paying customer who was delighted with their dream Nolte kitchen from Kuechen Harmonie.

If you are looking for a kitchen for your own home or if you are an architect, interior designer or a builder looking for a kitchen for your client and you are fed up with the 70% OFF sales hype. Why not give your local independent kitchen showroom a call or call Kuechen Harmonie to start your design process, as we design and sell throughout the UK from our showroom in Glasgow. We  recently completed a 5 kitchen development in London. Why settle for less than true and honest value for money, tailored to your requirements, using probably the finest German Kitchen manufacturer, NOLTE KUECHEN.

Gary Scullion  -  THE KITCHEN GURU