Maximizing your gross profit margins is undoubtedly something you think about often. Staying on top of your GPM is something that helps you make decisions regarding almost every aspect of your business, including but not limited to, your inventory, promotions, and of course pricing. Here are several ways you can begin to optimize and maximize your gross profit margins.
Increase Your Products’ Perceived Value – One thing is for sure in retail – consumers are more than happy to pay for certain brands that are thought to be superior. It may seem counter-intuitive to want to pay more for products that can be found elsewhere for less, but paying more seems to make people feel good about themselves and feel superior about their choices. They want to stand back and admire their newly painted living areas and congratulate themselves for purchasing the best paint available. For paint and decorating dealers, making sure your customers know they are buying a premium product is extremely important. Remind them of that fact every chance you get – in your marketing and also in-store. Make sure your staff understands why your products are better and that they can properly explain and/or demonstrate to your customers why they are better. PDRA’s Drawdown Kit can also help you show your customers how good your product is by demonstrating to them how evenly your paint goes on and how well it covers various surfaces.
Use Personalized Promotions and Smart Pricing – Analysis of your customer database and shopper preferences is essential to implement this strategy. Running sales and promotions doesn’t mean you need to throw your profit margins down the drain. Your analysis will reveal those shoppers that you know will convert at full price, and those who will hunt for bargains and only buy when they feel they are getting a deal. Use the data you collect about customer spending to tailor sales and promotions for those specific shoppers. Sales restrictions can also help keep your margins up – Product A is 40% off with a $250 purchase, for instance.
Bundle It Up – Low margin items can always be bundled with higher margin items to help keep your overall GPM’s up. Instead of selling paint and sundry items separately, try bundling those items together. PDRA’s Project Pro can help you and your staff with this strategy. You will learn how to sell entire DIY projects, rather than individual products. You can then decide what type of bundles you want to offer in your store based on the DIY project products you see customers buying the most.
There are many different strategies for increasing your gross profit margins. Using the technology available to you is one of the best ways you can do this as well as brainstorming different ways to manage your inventory and promotions. Using tools and educational programs available to you as a small independent retailer is also a smart move that can have your profit margins soaring in no time!