How to be competitive without selling on price

First thing is first. If you are selling on price, you are losing. Why can I say this with such confidence? You cannot compete with Target, Costco, Amazon, Walmart on Price. That is literally their business model. Buy a ton of products, get super deep discounts because of volume, sell product at a nominal markup. The local stores (you) cannot compete with these big box retailers in terms of price. So, stop trying. Stop losing sleep over it. You will end up cutting your prices to make a sale that you lose money on. The more of these sales you make, the faster you will be in financial crisis.

You should avoid selling on price as your differentiator at all costs. Do “everything” else first

Here is a simple list of things that you should make sure you knock out of the park BEFORE you are worrying about dropping prices.

Highlight Your Unique Value

Emphasize what sets your store apart, whether it's superior customer service, exclusive products, or better warranties. Make sure your customers know why your prices might be higher. You get what you pay for is not BS. It is true, and I have seen it when comparing the buying experience differences when purchasing a Lexus vs a Toyota. Both are great cars, but I paid considerably more for my Lexus than the Toyota. With the higher price, I got “little extras.”

The dealership had my phone number in their phone system. Every time I called, they answered with “Hell Mr. Lucien, how can I help you?” When they transferred me to the service department, they already knew who I was, what car I purchased, and everyone was beyond kind. It was a different level of service. When I bought my car, I was buying the car, but I was also buying confidence the car was good quality. I was buying the service department would handle whatever issue arrived in a timely manner. I was buying trust in the warranty would ACTUALLY cover any issues if they arrived. I was also buying the people I was doing business with. Everyone I encountered was beyond kind and knowledgeable.

My Toyota purchase was a different experience. Again, great car, but I didn’t get the “feeling” that I was not just a number in their business. I would call and wait on hold for service. They would not have the part, and I would be one car short for a week. The Toyota dealership definitely didn’t leave me water bottles in the cup holders and wash my car every time I brought my car in for service.

In your furniture store, you have a ton to sell that is unique to you, that is not related to the price whatsoever.

Unique Value Ideas:

• We have been in business for 25 years. We will be here if you have a problem with your furniture
• If there is an issue, you can call me on my cell phone
• We will do white glove delivery
• Our guys wear booties when we do deliveries
• We will throw in a free pillow
• We will set up your furniture
• We will take away your old furniture
• We will deliver it on your schedule, and on time
• We sponsor the local football team. Help us support our local kids

Promotions and Discounts

Consider offering a limited-time promotion or discount to match or beat the competitor’s price. This could be a percentage off, a buy-one-get-one deal, or a special financing offer.

Don’t assume the customer’s biggest priority is the price. It might be their monthly payments be below $X. SO get them financed with a low payment over a longer period. Amazon won’t do that and hold their hand through that process.

Everyone loves a deal too. So, figure out how you can offer a “special” to get them to purchase today, but still not sell on price. You could sell the mattress for a higher price, but you are running a special where you throw in a free custom sleep pillow.

Improve Customer Experience

Buying furniture can be stressful. Furniture is usually proportionally expensive to the buyer. Even if it is cheap, the person that buys cheap furniture is spending a large portion of their income on this furniture. They are thinking of it as an investment, and if they are not thinking of it as an investment, you should point out that it is. Ask the questions:

• How much is getting rid of your back pain worth?
• You spend 1/3 of your life in bed. You deserve a good mattress
• Your wife will love this new dining set
• Your kids will enjoy this sofa, but not be able to tear it up.
• Get the sleeper because then your family can visit more.

Invest in enhancing the shopping experience in your store. Personalized service, a comfortable environment, and knowledgeable staff can make a significant difference. I want to buy from someone I trust. I don’t get that experience at Walmart or Costco.

Now that I have talked about selling on value, lets get to the meat of the question. How can you sell on price and still win?

No matter what, you must make a suitable profit. It does not matter what the guy down the street is selling the same mattress for, if you can’t match that price, AND STILL MAKE A GOOD PROFIT. If you can’t make a good profit, let the other guy have the sale. It sucks. It will give you a belly ache, but that pain in your stomach from losing one sale is way better than the pain you will have when you have to tell your faithful employees that they don’t have a job because there is no money left in the bank account.

How do you lower your prices, but still maintain a profit? It all comes down to your expenses. Lowering your expenses raises your profit, thus allowing you to lower your price, and remain profitable. How do you lower your costs? I could write a book on this alone, but I’ll give you some quick hitters you need to make sure you are doing.

• Maximize the production from every employee
• Negotiate on the rent of your building or your purchase price
• Only do advertising that works (be a stickler for tracking this)
• Don’t overpay commission or taxes
• Use a software to maximize profits and minimize expenses on an ongoing basis. EZ Process Pro is the best furniture software to help you accomplish this goal hands down
• Let the software do tasks faster and more accurately than a human can
• Save money when purchasing the furniture

I’ll go into some strategies to help you with the last suggestion.

Find good manufacturers that sell good products and stand behind their furniture. This will decrease your cost on going to customers’ hoses multiple times for warranty issues. Also, look at what your competitors are selling. You might want to choose products that they don’t have, and even negotiate with your rep that they won’t sell them in the future when you start selling a ton of their furniture.

Build a relationship with your rep. Be honest about what you are thinking and concerns you have with the product. Good reps have been around a while, and can help you problem solve, even if they are selling to your competitor right down the street.

Don’t buy from 100 different manufacturers. Choose 5-10 manufacturers and deal with them exclusively. If you want to go after big name manufacturers that might bring in customers simply because you carry them… cool. Simply limit the total number of manufacturers. The less manufacturers you buy from will automatically result in you having higher dollar value orders because of volume. When you have enough volume, you can ask for volume or container discounts. This discount on your purchase price of the furniture BEFORE it is even on your floor is the golden goose you are after. This allows you to lower your sales price and remain profitable.

If you implement all of this, and still have customers price shopping you, and asking you to price match, here is what I would say.

Will Amazon deliver to the third floor of your apartment and take your old mattress away? If you buy from the guy down the street because he is $20 cheaper, will he take care of you if there is a problem? We have been here for 25 years. If you have a problem, call me (on this phone right here). We will take care of you. We always have. We always will. Is that certainty of knowing we will take care of you worth $20? If it is not, then you should go buy from the guy down the street.

Schedule a Discovery Call