I am a fan of Morning News Beat (www.morningnewsbeat.com), a daily newsletter on retail topics. One of today's thoughts struck a cord:
"Employee Discounts Gain Traction In Various Venues
The Wall Street Journal reported that “taking a cue from the nation's auto makers, a widening variety of retailers are extending coveted ‘employee discounts’ to all shoppers. Stores selling everything from computers to golf clubs are holding sales offering consumers the same price cuts they once reserved exclusively for their workers.
The upside of the promotions seems to be that the allure of an “employee only” discount is believed to encourage consumers to buy more than they ordinarily do, and the sales generally are replacing end-of-season sales that would have taken place anyway. But there is a downside – angering employees who used to think that their deep discounts made them special.
KC's View: Actually, we take the somewhat contrarian position that offering employee discounts to consumers is a surpassingly dumb idea – especially in the auto industry. While the promotion certainly has moved its share of cars, we wonder what the exit strategy is – once the promotion is over, if any shopper walks into a Ford dealership, it seems to us that any price higher than the employee price might be deemed too high.
The American car companies that have taken this approach have made it about price, not value, not quality.
It isn’t a coincidence that while the US car companies were embarking on this strategy, Toyota raised its prices – as if to say, “If you want a better car, you’ll find it here.”
The foolishness of the “employee pricing” strategy may be less striking in other venues, but we think that it leaves the retailer with nowhere to go when the sale is over…and it is the retailer’s own fault."
A couple weeks ago my girlfriend and I made a purchase at Pottery Barn. When we noted the price, one of the salespeople commented to us that she only worked there for the 40% discount given to employees. I suspect that is true of the part time workers in many of these stores. I remember when I worked in retail during high school, college, and for a time afterwards. Discounts steadily shrunk during those years. Bergners/Carsons/Boston Store once offered 40% on clothing. By the time I last worked there I think it was down to 20%.
Are employee discounts something that should be given to all, or reserved for the employees?