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A Hardware Retailing industry viewpoint by Mike Aylen recommends that hardware retailers build customer groups and set discounts by product category rather than applying one global rate. The advice is an expert’s proposed approach, not a report of measured results; it stresses regular sales reviews, trial periods for new customers and time-limited SKU exceptions.
Hardware Retailing published a viewpoint by industry expert and NHPA strategic consultant Mike Aylen recommending that retailers use customer groups and product-specific discounts to pursue contractor sales without eroding margins. The article is the fourth installment of his “Inside the Margin” series and presents operational advice, not reported evidence that the approach has produced a particular financial result.
Aylen advises retailers starting from scratch to keep their main customer groups to 10 or fewer, with individual plans added for customers whose volume warrants separate treatment. He suggests defining groups around the work customers do, such as plumbing or painting, and using a retailer’s existing customer base to decide which categories fit its local market. Builders, concrete workers, property maintenance firms and local councils are among other possible groups.
Retailers should set clear allocation criteria before assigning customers, the article says. These could reflect a customer’s trade, sales volume or both. Aylen describes one retailer that divided plumbers into large, medium and small groups and tied discount rates to monthly sales. He also recommends reviewing customer sales at least twice a year, using customer-level reports to adjust assignments and investigate declining business.
For pricing, Aylen argues against a single discount applied across all departments. Instead, retailers should test rates department by department and, where necessary, refine them at the class, fineline or individual stock-keeping unit level. He says retailers can use pricing tools such as Margin Master or Epicor Pricing Planner, or prepare calculations in Excel. He also cautions against locking SKU-level exceptions to a fixed price without an expiration date.
Category Discounts Can Protect Margins
The practical issue for retailers is that a uniform discount can have very different effects across a store’s product mix. Aylen’s examples illustrate the risk: a 15% discount for plumbers could cut into returns on hot water units or other low-margin, high-value items, while the same discount for painters could mean selling ladders at a loss. Those are examples cited by the author, rather than independently verified financial results.
Category-level pricing is presented as a way to match offers more closely to customer purchasing patterns. The approach could also give retailers a structured basis for discussing additional business with contractors: compare what a customer buys with the potential monthly spend, identify products they source elsewhere and explain what terms might apply if they consolidate purchases. Whether that increases sales or improves profit would depend on each retailer’s costs, prices and customer response.
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How Aylen Structures Customer Plans
The article’s proposal begins with customer segmentation, then links eligibility and discount levels to defined criteria. Aylen says a retailer might reward loyalty even when a customer’s sales volume would otherwise place them in a lower tier. In his example, a customer who gives the store all of their business could be offered a higher-tier plan as recognition of that relationship.
For new customers, Aylen recommends a 60- or 90-day trial group rather than immediately granting the best discount. The customer would be told the retailer’s criteria and given time to demonstrate that they qualify for a permanent group. He also describes a retailer’s cost-plus-28% plan for plumbing products, which priced a clamp at 94 cents compared with a cited competitor price of $1.64. The comparison is offered as an example of why plans should be checked against individual items, not as a general market price benchmark.
“The main advantage is that you can use it to grow sales.”
— Mike Aylen, industry expert and NHPA strategic consultant
Results Depend on Local Pricing
The article does not provide a controlled study, measured margin gains or sales-growth figures for the proposed method. It also does not specify how retailers should calculate an appropriate discount for every product category, or provide a common threshold for customer tiers. Aylen’s examples are intended to illustrate potential pricing mistakes; the source does not establish that the same outcomes would apply across retailers or markets.
Retailers would need to determine their own costs, competitor prices, customer potential and eligibility rules. The source also does not compare the financial performance of the named pricing software with spreadsheet-based planning.
Retailers Must Set Review Cycles
Under Aylen’s recommended process, retailers would define customer groups and criteria, calculate category-level discounts, then enter the plans into their pricing system and assign customers. They would review sales and customer allocations at least twice a year, while trial groups could be assessed after 60 or 90 days. SKU exceptions should carry expiration dates.
The article is one installment in the “Inside the Margin” series. Aylen says he plans to address another topic in a future installment, but the source does not give a publication date or identify the next subject.
Key Questions
What is the article recommending?
Mike Aylen recommends grouping contractor and professional customers, setting discounts by department or product category, and reviewing sales data regularly rather than applying one discount across the whole store.
How many customer groups does Aylen suggest?
For a retailer building a system from scratch, Aylen recommends keeping the main groups to no more than 10. He says some high-volume customers may need individual plans in addition to those groups.
How often should customer allocations be reviewed?
Aylen recommends reviewing them at least twice a year, using customer sales reports to make adjustments and investigate declining sales.
Does the article show that category pricing increases profits?
No measured profit or sales results are reported. The article presents Aylen’s expert recommendations and examples; it does not establish a quantified outcome for retailers using the approach.
How does Aylen suggest handling new customers?
He recommends considering a 60- or 90-day trial group and explaining the criteria for permanent placement, rather than granting the highest discount immediately.
Source: hardwareretailing.com
