How to successfully run a retail sale

How to run a retail sale

Running a sale is one of the most effective methods to drive sales in retail. Done properly, it can boost revenue, increase traffic and engage existing customers. In fact, according to a study by software advice, discounting is the top “pricing strategy for retailers across all sectors, used by 97 percent of survey respondents”.

It doesn’t take much to realise that sales can be an important tool for your business. Successfully running a sale however, is something that does take some strategic consideration, planning and execution. Done poorly, a sale can attract the wrong type of customers, damage your brand and wipe out your profits.

Understand your objective

Before we jump into the details of sales strategies, it’s important you have a specific objective you’re trying to achieve for your sale. This will help you to work out the amount, when and what  you should discount to help grow your business.

Some basic objectives for your sale could be to:

  • Attract new customers
  • Engage existing customers
  • Reward members
  • Get rid of excess stock
  • Get rid of old stock
  • Increase sales volume
  • Increase average transaction volume
  • Increase cash-flow (to purchase new stock or reinvest in the business)

Use the sales data!

Of course, once you’ve decided on your objectives, each objective should have a measured target, and sales data should be analysed to ensure you’re making correct decisions in the future.

These decisions can be when, where and how to run the next sale. Whether your items are priced at the correct price (if something isn’t selling at $300 and you take 20% off and they run out the door at $240, it may be worth changing the price). Or which items either draw people in, or are picked up as an added purchase.

Segment your audience

Before deciding on the type of sale you’ll run, it’s important that you understand your audience and the motivations behind purchasing your products.

While not necessarily applicable to all retail businesses, a simple guide to segmenting your audience is via frugal, savvy and high roller categories:

Frugal Savvy High Roller
Shopping Habits/Price sensitivity
  • Doesn’t pay full price for anything
  • Purchase decisions are heavily based on price
  • Showrooms/webrooms for the best price
  • Purchases infrequently
  • On the lookout for sale items, but willing to spend on products they really like.
  • Purchase decisions are based on several factors, such as quality, service and price
  • Purchases more frequently
  • Values product quality and service above all else
  • Price is a non-issue
  • Willing to pay more for exclusive products and new arrivals
  • Purchases frequently
Possible engagement/sale strategy
  • Send alerts for clearance sales
  • Suggest low price, but high margin items
  • Instil urgency and scarcity through limited/limited time offers
  • Send offers related to previous purchases.
  • Suggest upsell products that compliment purchases
  • Regularly keep in touch with company updates and “what’s new” emails.
  • Provide sneak peeks of new products
  • Suggest upsell products that compliment purchases
  • Offer exclusive shopping events
  • Provide VIP services and offers

Hopefully you have already built a database of customers, and have a POS system to track your sales information.

Be mindful of timing

While it will naturally depend on the objectives of your sale, it’s important to be mindful of the timing of your sales. If customers are shopping at certain times in the week, month or year, it may pay to time your sales with peak times or relevant events.

If you come to expect that customers purchase one product, then follow up with a second product a few months down the track, it may pay to run a sale around this time to incentivise the second sale.

Check your margins

It should go without saying, but ensuring your margins are adequate is key to having a successful sale. Different product categories can have different discounts, and some will sell easier than others. Just make sure that you’re not sacrificing too much in order to generate hype, unless you’re aggressively trying to attract new customers and have capital to weather you through.

Sales events

There are a variety of sales events that you can use to bring people into your store, some of which are:

  • New product launch
  • Store wide
  • Loss leaders
  • End of season
  • Excess stock
  • Annual events (Christmas, boxing day, black Friday etc.)

New product launch

New product launch sales can be used to bring customers in to get a feel for how new items are selling. By discounting older items, you draw people into your store, and customers notice the new stock.

Store wide

Store wide sales are a great way to increase your new customers. They’re also a great way to move large amounts of stock. While you may not necessarily heavily discount everything, it’s good to have a minimum of 50% off for store wide sales to draw the most attention.

Loss leaders

Loss leaders are a heavily reduced (often causing you to lose money on a sale) product that draws customers into the store. While you may lose money on the ‘loss leader’ item, you make up for it with additional purchases after the customer has been drawn into your store.

Loss leaders can be implemented in two ways:

  1. To draw customers in, purchasing additional items
  2. To obtain new customers, who have not yet purchased from your store, but will now be on your mailing list and return to the store in the future.

Obviously using a loss leader needs to be done carefully, with clear tracking and analysis of your sales metrics.

End of season

End of season sales are a great way to sell stock that is seasonal (i.e. winter jackets), clearing room for new stock. End of season sales are also a great way to keep your store fresh, by continually changing stock and running limited product lines.

Excess stock

Rather than waiting for stock to be cleared and money being held up, it’s often much wiser to clear stock for items that sell better by marking them down or having a sale. In many cases, you can start with a smaller reduction, and keep reducing prices each week until the stock moves.

If you do have excess stock, it’s often much easier to mark it down marginally (say 25%) while sales are better, than it is waiting and the stock building up over seasonal sales cycles. If the stock isn’t moved, it often means that these items need to be discounted much further than normal (say 50%-75%) in order to move the stock during a sale, due to value perception compared to other stock.

Again, reducing excess stock frees up capital and keeps your store fresh with new products, helping you to make better decisions in the future.

Annual events

While everyone is in a mad rush buying gifts, annual events allow you to capitalise on the season, trends and the marketing of bigger brands.

Hosting sales during this time also gives you an excuse to have a sale or advertise your store to customers, rather than simply annoying them with endless messages of the same content.

If you advertise a sale, do it properly

If you make the effort to advertise your sale (and you should), it’s important not to damage your brand by offering weak discounts on products. Having 5% or 10% off an item is hardly worth advertising a sale for. If you need to reduce items, simply mark them down – don’t create a sale – as hosting a sale for a measly 10% off is likely to insult your customers.

Of course, if you have high ticket items there is an exception to this rule. 10% off a $5,000 item is worthy of mentioning, but 10% off a $100 item isn’t worth advertising to your entire audience.

Types of sales

Depending on the objective you’ve chosen to run a sale for, certain types of sales will work better than others. To get you started with a few ideas, here are some of the most common:

  • buy one, get one free/half price/30% off etc.
  • bundle package (buy 3 items for $100 – usually $40 each)
  • VIP discount
  • Membership discount
  • Club association discount (member of a related club outside of your business)

Don’t become reliant

While sales can be useful, having regular sales can diminish their effect, as well as your brand. Dont’ fall into the trap of having sales an essential part of your business. A number retailers fall into this trap, then have to spend considerable effort in building up their brand again.

Your market shouldn’t come to expect to pay the sale price, and your business shouldn’t survive on the running of sales. If customers come to expect products to be at a reduced rate, it’ll make it hard to generate attention for your sales and devalue the integrity of your product prices and value.

Remember that sales should be an added tool to entice customers and keep your business flowing, not something that your business relies on in order to turnover sales.

Invite your customers

If you’ve ever organised a party, you’ll know that if you don’t invite people, no one will come! The same applies to retail sales. Don’t expect that just because you have a sale, that customers will know about it. You need to notify your customers (or customer segment) by:

  • Store signage
  • Website banners/graphics/text
  • Email
  • Social Media, and
  • Advertising (online, radio, print, TV)

Remind customers as the sale comes to a close, but ensure you’re still engaging customers, rather than simply annoying them (check your stats such as open rates, and click through rates of emails to determine this).

Create scarcity

No one likes to miss out on a deal. Creating scarcity is a great way to help put pressure on a buying decision. If you run a sale, only run it for a limited time, through an exclusive offer, or double down by creating a sale with a limited product line.

If you keep your store looking fresh and new, this will also help to make your customers feel the need to come back regularly to see new stock, or avoiding missing out.


Running a successful retail sale can be a fantastic way to increase sales, keep cash flowing, engage existing customers, and obtain new ones. It is important however, that you have a solid understanding of your audience, your metrics, your strategy and your objectives to having a sale, so you maintain your brand, reach new customers and increase your profits!


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