OPINION: Can discount vouchers help your business?

Mark Fletcher was one of the key note speakers at this year’s Local Shop Summit. His stand out comment was that retailers should challenge their business every day.

I was fortunate enough to have a conversation with him at the very end of the event. He started by presenting me with a customer receipt from his Knox City store. At the end of the ticket was a voucher for A$9.59 on a sale of A$63.94 or around £40. The voucher scheme that Mark has developed gives 15% back to his customers to spend at any time over the following 28 days.

15% would have severely reduced my ability to make a reasonable living in my business so I was interested to know how it can work in his business. Breaking the receipt down Mark took me through each element to explain how this promotional tool works in his store.

The first thing he told me was that he panders to the expectation that Australia newsagencies are expensive. This allows him to work on much higher profit margins than UK news and convenience retailer get on average. The first four products are all 3D jotters from the LiveLife range. These are notepads with high quality 3D graphic covers . At A$8.99 he told me he is making an 80% gross profit margin. The rest of the items on the receipt were all of a similar margin. So that explained how he funds the 15% voucher.

He also told me that gifts and collectables are a natural add on for Australian news retailers as they have a significant part of the greetings card market. That is the only promotional tool that he uses on a day to day basis.

He clearly finds this a successful way to grow sales as his Knox City store, which is in a suburban Melbourne Westfields mall. While a 15% discount may be too rich for UK news retailers and convenience stores the results that Mark is achieving certainly makes one think about the potential of alternative promotional and pricing strategies.