Point of Sale Software

Here are some Articles from the Blog Subject - Discount management -

ACCC sues Coles Woolworths $50+ million

POS SOFTWARE

 

The recent legal action by the ACCC against Coles and Woolworths is a shocker. Focusing on allegedly misleading discount campaigns will bring retail pricing strategies under intense scrutiny.

What's at Stake in the ACCC vs. Supermarket Giants Case?

At the heart of this legal battle are the "Prices Dropped" and "Down Down" campaigns run by Woolworths and Coles, respectively. The ACCC contends that these promotions were misleading due to artificial price inflation before the discounts. 

Read what they are saying about one item here.

ACCC argument at Woolworths

Now, in total, the ACCC is taking to the Federal Court:  

  • Woolworths: For 266 products affected over 20 months
  • Coles: For 245 products affected over 15 months

The outcome of this lawsuit could have far-reaching implications on our pricing strategies, especially in our current never-ending inflationary environment.

The Numbers

These aren't small numbers; the potential penalties are significant, $50 million for each breach. That should be enough to make any retailer take notice.

A Common Scenario

Imagine this scenario: You've been selling an item for $6 for a while. Your supplier increases their price to $5, so you bump your selling price to $10. Then, a week later, you decide to run a 20% "discount" promotion, bringing the price down to $8. In retail, this is relatively common.

Based on what the ACCC is saying, your initial pricing and cost-based increase are standard practices, so that is okay here, but that "discount" promotion could land you in hot water. Why? Because your discounted price of $8 is higher than your original long-term price of $6. A week is hardly a reasonable period.

The Grey Area

The tricky part is determining a reasonable period before offering a discount.

"What if you offer a discount three weeks after increasing the price, a month, a few months, etc? Would that be misleading or fair?" The law needs to be more transparent on this, which leaves us retailers with a problem of what is reasonable.

My Two Cents

Based on my years of experience, it's best to err on caution. If you've just had a significant price increase, think twice before slapping a discount label if the final price is still above your long-term price point. Your POS System shows a history of when you sold an item and for how much. It will also inform you how long the new price has been in effect. I will also supply you with many of the records you may need.

Let's tweak our scenario a bit more:

  1. Original cost: $3
  2. Original selling price: $6
  3. New cost: $3.50
  4. New selling price: $7
  5. 20% discount price: $5.60

In this case, your discounted price ($5.60) is below your long-term price ($6), so it will likely be okay.

The Bigger Picture

This case against Coles and Woolworths isn't just about big supermarkets. We must be more mindful of how we present our pricing and promotions to customers.

A Wish for the Future

Would it be great if suppliers informed us about price increases? This would allow us to prepare and communicate proactively with our customers, but we can discuss that in another post.

In the meantime, please ensure that your pricing practices comply with the current legal standards and keep our customer's trust. After all, that's what good retailing is all about.

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How to stop a double discount

POS SOFTWARE

While discounts can effectively draw in people and increase sales, retailers should tread carefully. Multiple discounts applied to a single purchase can rapidly shrink profit margins to unsustainable levels. Looking up bargain shopping sites, you can read how double discounts dramatically impact a business's bottom line in dramatic examples. Let's explore double discounts and how you can prevent them using your point of sale (POS) system.

What Are Double Discounts?

Double discounts occur when a customer receives two discounts on the same purchase. For example:

  • A product is on sale for 20% off
  • An additional 10% drops off thanks to the customer's loyalty status.

While this added discount is a significant saving for them, it can destroy your profitability if not carefully managed.

The Impact of Double Discounts

To illustrate the effect of double discounts, let's look at this simple example:

Double discount

 

In this scenario, you lose $28 on a $100 item. Imagine this happening across multiple products and customers - it adds up quickly!

How to Prevent Double Discounting

Fortunately, your modern POS system offers features to help prevent double discounting. Here's how you can set it up:

  1. To avoid this happening, please do the following.

    Go to system maintenance, which is marked with the red arrow.

     

     

    Then find this option "prevent discounting of sale items," marked with the red arrow here.

     

    Set this to yes, as I have here. This will stop the double discount.

Benefits of Preventing Double Discounts

By implementing this simple change, you'll:

  • Protect Your Profit Margins: Ensure you're not giving away more than intended on each sale.
  • Simplify Pricing: Customers and staff will better understand the final price.

My Personal Experience

I went to a bargain shopping site, where a guy explained how to get another discount on top of the existing discount for an item. I followed instructions and got a $140 item reduced to $100  for about $70. 

Additional discount management tips

While preventing double discounts is crucial, here are some other strategies to consider:

  • Train Your Staff: Ensure all employees understand your discount policies.
  • Clear Signage: Display your discount rules clearly to avoid customer confusion.
  • Regular Audits: Periodically review your sales data to catch any discounting issues.  See how you can stop many of these automatically in our POS Software here.

Conclusion

Preventing double discounts is a simple yet effective way to protect your profits, so leverage our POS system's features and establish transparent discount policies to ensure promotions boost your business profitability.