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In a Hardware Retailing industry viewpoint, Mike Aylen recommends that hardware retailers build customer groups and set contractor discounts by product category rather than applying one discount across departments. He says the approach can help retailers target offers and review customer activity, but the article provides advice and examples—not measured results from a study.
Hardware Retailing has published the fourth article in its “Inside the Margin” series, in which industry expert and NHPA strategic consultant Mike Aylen advises retailers to tailor customer discounts by group and product category. The recommendation is intended to help stores pursue contractor sales while avoiding broad discounts that, Aylen says, can cut margins unnecessarily.
Aylen suggests retailers starting a customer-group system limit it to no more than 10 groups, with additional individual plans for customers whose volume warrants them. Groups should reflect the store’s customer base and local market. His examples include plumbers and painters, alongside builders, concrete workers, property-maintenance businesses and local councils.
Retailers should define the criteria for each group, such as trade activity or monthly sales. Aylen describes a retailer that separated plumbers into large, medium and small groups and linked discounts to monthly sales. He recommends reviewing customer sales information at least twice a year, using reports to adjust allocations and identify customers whose purchases have declined.
For new customers, Aylen proposes a 60- or 90-day trial group rather than granting the best discount immediately. Once groups are established, he says retailers should set rates department by department, with further adjustments at the class, fineline or individual-product level where needed. He says pricing software such as Margin Master or Epicor Pricing Planner can support the work; a spreadsheet is another option.
Discounts Can Differ by Product
The article’s central business point is that a discount suitable for one product line may be damaging in another. A store-wide offer can reduce prices on items that already have thin margins, or give customers discounts where they are not needed. Aylen’s approach instead asks retailers to assess each department’s selling prices and margins before setting a group’s offer.
That matters to independent hardware retailers competing for trade customers, whose purchases may span very different products. More tailored plans could give a store a way to reward loyalty or encourage a customer to consolidate purchases, while limiting discounts on products that cannot support them. These are the article’s proposed benefits; it does not report a controlled analysis showing how much sales or margin such plans produce.
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The Examples Behind Aylen’s Advice
Aylen frames the piece as practical guidance in the “Inside the Margin” series, focused on growing sales and protecting margin among contractor and professional customers. The supplied article gives examples to illustrate how pricing can go wrong when a plan is too broad or insufficiently checked.
In one example, Aylen says a retailer’s 15% global discount could leave little room on high-value, low-margin plumbing products and result in ladder sales at a loss. In another, he says a plumbing plan priced at cost plus 28% produced a clamp price of 94 cents, compared with $1.64 at the retailer’s main corporate competitor. These are examples reported by Aylen, not independently verified market-wide figures.
““Do not make the mistake of putting a global discount across all departments.””
— Mike Aylen, industry expert and NHPA strategic consultant
No Results Data Is Provided
The article presents Aylen’s professional advice and retailer examples, but the supplied material does not include sales data demonstrating the effect of category price plans on revenue, profit or customer retention. It also does not specify how retailers should calculate target margins, set discount thresholds across different markets, or determine the right review period for every business. The examples are attributed to Aylen and are not accompanied by independent verification.
Retailers Must Set and Review Plans
Aylen’s proposed next steps are for retailers to use their own customer and sales data to define groups, model discounts by department and more specific product categories, then build the plans into their pricing system or a spreadsheet. They can allocate customers, review results and revise group membership as sales patterns change. For new accounts, the article suggests using a time-limited trial period before assigning a permanent plan. The source does not announce a rollout, deadline or follow-up results; Aylen says the series will address another topic in a future article.
Key Questions
What is a category price plan?
It is a pricing approach that assigns customer groups discounts tailored to product departments or narrower categories, rather than applying a single rate across all products.
How many customer groups does Aylen recommend?
For retailers building a system from scratch, Aylen recommends starting with no more than 10 groups. He says some high-volume customers may need separate plans in addition to those groups.
How often should retailers review customer groups?
Aylen recommends reviewing sales activity and group allocations at least twice a year, using sales-by-customer reports to spot changes.
Does the article show that category pricing increases profits?
No measured results are provided in the supplied article. Aylen presents the method as advice for pursuing sales and protecting margins, supported by examples rather than a quantified study.
What does Aylen recommend for product-level exceptions?
He advises against locking a SKU-level exception at a fixed price and recommends giving it an expiration date.
Source: hardwareretailing.com
