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In a Hardware Retailing industry viewpoint, Mike Aylen recommends that hardware retailers build contractor customer groups and set discounts by product category rather than applying one discount across the store. He says retailers should review customer sales at least twice a year, use trial groups for new accounts and put expiration dates on SKU-level price exceptions.
Hardware Retailing has published a new industry viewpoint in which Mike Aylen, an industry expert and NHPA strategic consultant, recommends that hardware retailers tailor contractor discounts to both customer groups and product categories. The guidance is aimed at growing professional-customer sales while avoiding discounts that unnecessarily erode margins on individual products.
Aylen’s fourth article in the “Inside the Margin” series begins with customer segmentation. Retailers starting from scratch should, he recommends, keep their main customer groups to no more than 10, while allowing separate plans for exceptional high-volume accounts. Groups could reflect trades such as plumbers and painters, as well as builders, concrete workers, property-maintenance businesses or local councils. The retailer’s existing customer base should guide the categories.
Each group needs clear allocation criteria. Those may be based on a customer’s day-to-day work, sales volume or both. Aylen describes working with a large retailer that divided plumbers into large, medium and small accounts, with discounts tied to monthly sales. He says retailers can use sales-by-customer reports to review assignments and recommends doing that at least twice a year. Declining sales can prompt a conversation with the customer about the reasons and possible changes.
Aylen also advises retailers to assess a customer’s likely monthly spending and compare it with what the customer currently buys. That can reveal products or everyday needs the customer purchases elsewhere, giving the retailer a basis for discussing whether more business might move to the store. New accounts, he says, should not automatically receive the best permanent deal: a 60- or 90-day trial group can let them demonstrate that they meet the retailer’s criteria before being assigned to a lasting plan.
Why Department-Level Discounts Matter
The article’s central point is that a single discount across all departments can have different effects on different products. A rate that appears competitive on one line may leave little margin on a low-margin, high-value item, or price another item below a competitor. Aylen gives the example of a retailer offering plumbers and painters 15% off retail across the store: he warns that the rate could make hot-water units unprofitable for the plumbing group and ladders loss-making for painters.
That makes pricing structure relevant not just to sales teams, but to retailers trying to balance customer retention with product-level profitability. Category plans can direct discounts to the products and customer relationships where they are intended to support business, rather than applying them indiscriminately. The article presents this as practical advice, not as measured evidence that a particular pricing method will produce a defined increase in sales or margin.
More detailed pricing also gives retailers a way to recognize loyalty without relying only on sales volume. Aylen suggests a customer who falls into a middle sales band but gives the store all of their business could be rewarded with placement in a higher-discount group. Retailers would need to weigh that decision against the economics of the products the customer buys.
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How the Proposed Plans Are Built
After setting customer groups and their entry criteria, Aylen recommends deciding on discount rates separately for each group and department. Where necessary, pricing can be broken down further by class, fineline or individual SKU. He says retailers using Margin Master or Epicor Pricing Planner can use those systems to examine department selling prices, and advises turning off rounding while calculating discounts. Retailers without those tools can work through the figures in Excel.
He illustrates why product-level checks matter with a plumbing plan set at cost plus 28%. In his account, a retailer’s clamp was selling for 94 cents under that plan, while its main corporate competitor charged $1.64. The example is Aylen’s account of a case he encountered; the article does not provide a date, location or broader pricing data for the comparison.
Once rates are reviewed, retailers can enter the plans into their pricing systems and assign customers to the appropriate groups. Aylen warns against fixing a SKU-level exception at a permanent price: he advises using an expiration date so the exception does not remain in place indefinitely without review.
“Do not make the mistake of putting a global discount across all departments”
— Mike Aylen, industry expert and NHPA strategic consultant
Results Depend on Local Pricing Data
The article offers recommendations and examples, but it does not report a controlled comparison, quantified sales gains or margin outcomes from adopting the plans. It also does not specify the retailers’ locations, the date of the clamp-price example or the product-cost assumptions behind the figures. Aylen’s examples should therefore be read as illustrations of potential pricing risks, not as a forecast for every retailer.
The appropriate group criteria, discount rates and review decisions will vary by store, customer mix and product economics. The source does not provide a universal discount schedule or a method for calculating a target rate. Retailers would need to examine their own costs, sales records and competitive prices before changing plans.
Review Plans Against Customer Sales
Aylen’s recommended next step is for retailers to use sales-by-customer information to establish groups, set criteria and calculate discounts by department. They can then build the plans in a pricing system or spreadsheet, assign customers and monitor sales. He recommends reviewing customer allocations at least twice a year and using trial groups for new accounts before moving them into permanent plans.
The article is the fourth installment in the “Inside the Margin” series. Aylen says he plans to address another topic in a later installment, but the source does not identify its subject or publication date.
Key Questions
What does Aylen mean by a category price plan?
It is a pricing approach that sets customer discounts by product department or category, with further differences by class, fineline or SKU where needed, rather than applying one discount across the store.
How many customer groups does he recommend?
For a retailer starting from scratch, Aylen recommends no more than 10 main groups. He says some high-volume customers may need separate plans beyond those groups.
How often should retailers review customer assignments?
Aylen recommends reviewing them at least twice a year, using sales-by-customer reports to check activity and identify accounts with declining sales.
How should a retailer handle a new contractor account?
Aylen suggests considering a 60- or 90-day trial group rather than immediately granting the best permanent discount. The customer can demonstrate whether they meet the retailer’s criteria during the trial.
Does the article show that these plans increase profit?
No quantified result is provided. Aylen argues that category-specific discounts can help retailers pursue sales while protecting margins, but the article does not report measured outcomes or establish a guaranteed effect.
Source: hardwareretailing.com
