Tom Smith is selling boats the way automakers have been selling cars – offering employee discounts to shoppers at his Colorado Boat Center in Loveland.
“It is the end of the year, and we just decided we needed to do something different than just ‘closeout pricing,”‘ Smith said.
Taking a cue from the nation’s automakers, Smith and 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.
Retailers are hoping to replicate the results of General Motors Corp., DaimlerChrysler AG and Ford Motor Co., which saw revenue surge after they rolled out employee-discount offers earlier in the summer. Spurred by the promotions, automakers in July recorded their third-best sales month in history.
Unlike Detroit’s Big Three, which are offering their promotions on most 2005 models to clear them out before 2006 ones arrive, other retailers generally aren’t trying to empty out their stores. As a result, the promotions outside the car industry tend to be shorter and focused on a limited number of items.
Smith’s discounts, averaging $4,000 to $5,000 per boat, are available only on 2005 models.
Many of the retailers introducing the employee offers are regional chains, but some national companies are following suit.
For two days last month, Comp USA offered customers “employee pricing” on computers from such brands as Apple and Sony. Denver sales manager Greg Groves said the chain sent word of the sale to customers whose e-mail addresses were on file.
Many companies long have given their employees special rates, but such deals weren’t passed along to customers on such a widespread basis until this summer. Previously, employee discounts generally were given to customers only as part of department stores’ “friends and family discounts” days.
While some of the employee- discount sales are truly novel and some retailers are extending some of their steepest discounts ever, industry watchers warn that others are simply a marketing ploy: They are just regular sales with a new name.
“Retailers have their ‘end of summer’ sale or ‘dog days of summer’ sale, and now they are just calling it the ’employee discount sale.’ It’s just a little more catchy,” said Bill Cody, managing director of the Jay H. Baker Retailing Initiative at the University of Pennsylvania’s Wharton School.
Dipankar Chakravarti, a professor of marketing at the University of Colorado and a past president of the Society for Consumer Psychology, said consumers may be more attracted to an employee-discount sale because they assume “things that firms do for their employees are somehow more generous.”
Denver Post staff writer Tom McGhee contributed to this report.
