By Patrick Avenell
SYDNEY: ‘Don’t blame retail staff for price erosion.’ That’s the message from IMC Australasia MPM brand manager Tom DiTerlizzi, who has gone against the trend, defending retailers in this current debate over price erosion.
Unlike service guru Bob Johnson, who blames a loss leader mentality and poor sales skills for lost profits, DiTerlizzi believes there’s nothing wrong with loss leading, and that good service doesn’t make much difference if retail mix isn’t right to begin with.
“I have had both good and bad experiences buying consumer electrical (CE) products,” said DiTerlizzi. “And although staff training is important in any business, not just in retailing CE products, it is simplistic to attribute the price people pay for products to a poorly trained shop floor staff or the so called loss leader mentality of retailers.”
So if we can’t point the finger at bad sales staff, what is to blame?
“The location of a store, for example, how accessible it is in terms of parking and the range of products it offers its customers from which to choose, are generally more important than how well trained its sales staff is.
“A highly trained shop floor team is not going to make a significant difference to a business if it’s in a location where the demographics cannot support the business, or the range of products being sold simply requires staff capable of providing customers an efficient, yet pleasant, shopping experience.”
DiTerlizzi believes that staff training only becomes important if the branding mix is right. He identifies price, product, place and promotion as four integral factors that will have the greatest influence on sales. Only when retailers are competing equally, good or bad, on this level will staff training become relevant.
As for loss leading, DiTerlizzi thinks that when suppliers complain of price erosion, it’s a case of them wanting their cake and eating it too.
“Loss leader pricing is a valid promotional tactic retailers use to build store traffic with the blessing of the marketers and manufacturers of CE products. Those very marketers and manufacturers, however, cry foul when they have to explain price erosion has led to lost profits.”
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