deals and discounts

Is your business equipped to appeal with deals?

By Erinn Morgan

Do you dare to discount? Many ECPs say sales and promotions are a boon to business in today's cost-conscious economy. Others argue that sales degrade a business' image. Where does your discounting strategy fall?

There are many competitive issues today that make some ECPs believe a discounting strategy is nothing short of a necessity. Beyond the economic slump and ever-increasing competition, they point to the rivalry delivered by e-tailers, the Internet, and smartphone technology.

“The Internet has created a real issue for our industry,” says Ed Beiner, president of Edward Beiner Group, which operates 10 Edward Beiner high-end optical shops.

“People are scanning frames in stores and then checking on their iPhone where they can get them cheaper.”

SCANNING FOR DOLLARS

Specifically, Beiner points to smartphone applications like RedLaser, which tells users all of the stores within walking distance where they can get a product of interest, along with prices, once a barcode is scanned.

“These are challenges we face,” he adds. “In our case, it's less about the recession and more about technology and more competition, and so we try to be a little more flexible with our pricing.”

In the past, Beiner followed a nodiscount strategy, but over the past several years he has started running a few under-the-radar sales for his upscale clientele to sweeten the pot in a competitive marketplace.

“Today's shoppers are looking for value, and to stimulate that person to walk in your door, you have to have an offer,” says Larry Pearson, president and CEO of Midwest Vision Centers Inc., which has 20 locations and in Minnesota and North Dakota. “We are always running promotions, so we see an ebb and flow to our business; but when we hit our really big promotions, we see a large uptick.”

The company reports daily sales volume increases of over 10 times its normal, non-sales days, particularly during its Customer Appreciation Days, which has become a million-dollar event.

“Anyone can research this stuff and find it cheaper online, so you really need to discount,” adds Jim Dennen, operations manager at the three-store Total Eyecare in New Jersey. “You need a promotion to entice people into your office in the first place. Then you need a promotion to entice patients to come back for routine care. And, then you need a promotion to keep patients coming back to buy frames.”

DISCOUNTING 101

This rundown delivers the basics on the most popular types of eyewear retail sales. Some retailers choose to run a combination of several sales throughout the year to keep the promotional excitement going.

“We run four basic promotions each year,” says Pearson. “A BOGO, a 50-percent-off-frames sale, a $50-off-complete-pair sale, and our Customer Appreciation sale.”

THE BASIC SALE: This type of effective promotion involves a simple, percentage-off format. At Denver-based Europtics, Ira Haber runs a 40-percent-off-frames sale from the end of June to the end of July. Pearson also runs a similar promotion in the first quarter, with 50 percent off select frames.

“Because our sales have been so successful, we added in a side sale of 25 to 50 percent off sunglasses plus 25 percent off contact lenses,” says Pearson. “We continue to really go after it by offering a low pricepoint, and we work with our vendors to help control the costs.”

THE BOGO SALE: The buy-one-get-one sale still has legs. A caveat: ECPs say customers are turned off by bait-and-switch scenarios. Instead, eyewear retailers are delivering value with BOGO sales that offer dollar-for-dollar matching discounts.

“I don't have any bait and switch ads,” says Dennen, who runs BOGO sales every other month during the year. “We always have a huge disclaimer at the bottom of our BOGO ads, but when you buy one during our sale, you really get one of equal value free. If you buy a $400 Tag Heuer frame, then you can get a $400 Tag Heuer frame free, not one from a dusty rack in the corner.”

At Midwest Vision Centers, BOGO sales are on for six months out of the year. This promotion includes frames and lenses. “If you buy a specialty lens, we will give you a high-index lens on another pair for free,” Pearson says. “Lens-to-lens, we are equal. On frames we also provide equal value, but it is from a select group of products. We try to be fair.”

THE CUSTOMER APPRECIATION SALE: Much anticipated by the customers of Midwest Vision Centers, the Customer Appreciation event has turned into a million-dollar sale for this regional retail chain. “Fifteen years ago they told me you simply couldn't do a two- to three-day sale in this business because optical customers need more time,” says Pearson. “But, we went ahead and offered 50 percent off frames and lenses over a long weekend—it was a deep discount over a short period—and it became wildly successful.”

THE “UNDER THE RADAR” SALE: Making the transition off of a no-discount policy, Beiner wanted to bring in discreet sales events for his high-end clientele. “So, we now run four sales a year in our different stores,” he says. “This may include events like a buy-one-get-one sale and a promotion involving $100 off prescription glasses and $50 off sunglasses. This really helps encourage second-pair sales.”

In addition, the Edward Beiner stores' sales are approached in an elegant way. “We send well-designed cards to our customers and don't advertise it in the paper.”

THE GROUPON-STYLE SALE: Launched in 2008 to appeal to the new economy's deal-conscious consumers, Groupon (groupon.com) is a website that features daily deals of 50 percent off or more on local and national products and services, including everything from sushi to 18 holes of golf. The site's concept has become wildly popular—and a number of optical retailers have jumped on the trend.

“Groupon will definitely generate a business spike for us,” says Dennen. “People are laying out the money for a product online so they want that return on investment and they have a deadline to redeem it—the vast majority are in within 30 days.” Pearson agrees that Groupon sales increase his business. “We see noticeable uptick in business with our own sales, but business screams when we run a Groupon sale,” he says.

Conversely, some ECPs have chosen to steer clear of Groupon. “We signed up to do one and then pulled out of it at the end,” says Nate Ogura, owner of Eyes on Fremont in Seattle.

“It's a new way to market, but I feel that it's devaluing our product. We have what I think is the best staff in Seattle and their service is something of value. I don't want to belittle that by discounting. It's a cheap way to get your name out there, but how many of those people are customers that will be returning versus those that just came in for the quick deal?”

At Europtics, Haber pulled out of Groupon sales when the company wanted online sale exclusivity. He was also running sales with The Denver Post's Denver Daily Deals, such as $200 worth of eyewear for $50, which he still uses.

“I think this type of sale brings in a certain element, but if you run it more than once a year, it degrades your normal patient base,” he says. “If you don't sell up on Groupon or another deal, it can kill your cost of goods. Some people stayed within the $200 offered, but most people upgraded. That was necessary, especially since Groupon keeps half of what you sell in the deal.” Haber adds that The Denver Post keeps 40 percent of what is sold, which has ranged from 420 to almost 900 online coupons per sale.

VENDOR PUSHBACK

Ira Haber, president of the Denver-based, four-store Europtics, notes that he is seeing more pushback on product discounting than ever before from sunglass vendors. “There are a number of companies that are getting more and more persnickety about pricing,” he says. In response, however, many ECPs say running sales greatly reduces their product returns rate. “Instead of returning product to vendors, we run a sale,” says Ed Beiner, president of the Florida-based Edward Beiner Group. “They don't want to see the product back.”

PRICE MATCHING AND COUPONS: In addition to running scheduled promotions, many ECPs say they also offer price matching and under-the-radar coupons on a case-by-case basis. Price competition from Internet retailers has been the driving force behind this trend. “We have price matched,” says Beiner. “It happens more than I like it to happen, but we put a limit on what the salespeople can do. We give them the ability to price match to a discount of 10 percent and that's it.”

At Total Eyecare, optometrists have coupons in the exam room to encourage patients who may be planning to take their prescription and purchase eyewear online.

“This is at the doctor's discretion,” says Dennen. “They have a coupon to give out for a free pair of polycarbonate lenses with a frame purchase.”

In the end, are sales and promotions necessary? Some say, “Yes.”

“It's the way the business has changed and it's just what we have to do to stay in business,” says Haber. “I see people who are doing more promotions. And for the people who are not doing it and just waiting for it to stop, I believe that they are going to do less and less business.” EB