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Hardware Retailing published Mike Aylen’s fourth “Inside the Margin” article, outlining a category-based pricing approach for hardware retailers serving trade customers. Aylen recommends defined customer groups, department-specific discounts and regular sales reviews, but the article does not report measured results from a retailer-wide trial.
Hardware Retailing has published a new industry viewpoint by Mike Aylen, an industry expert and NHPA strategic consultant, on how hardware retailers can set category-based prices for contractors and other trade customers. The fourth article in the publication’s “Inside the Margin” series recommends matching customer groups and discounts to sales patterns and product categories rather than applying one discount across an entire store.
Aylen recommends that retailers starting from scratch keep their main customer groups to no more than 10, with individual plans for exceptional high-volume accounts considered separately. Groups should reflect the retailer’s market and customer activity; examples in the article include plumbers, painters, builders, concrete workers, property maintenance businesses and local councils. He says retailers should define the criteria for each group, including the customer’s work and, where relevant, sales volume.
The article describes one large retailer that divided plumbers into large, medium and small groups and based discounts on monthly sales. Aylen also says retailers can account for loyalty when assigning customers: a customer whose sales place them in a middle tier might receive a higher tier if they provide all of their business to the store. These are recommendations and examples from the author, not reported outcomes from a controlled study.
After setting groups, retailers should determine discounts separately by department and, where needed, by class, fineline or individual product. Aylen warns that a blanket discount can cut margins on products where discounts are unnecessary or too costly. He suggests using pricing software such as Margin Master or Epicor Pricing Planner, or an Excel spreadsheet, to model prices. For customer-specific product exceptions, he advises against fixing a price indefinitely and recommends adding an expiration date.
Pricing Trade Accounts by Category
The approach matters to retailers because trade accounts can generate repeat business, but a broad discount may reduce profit on items with already-thin margins. Aylen’s central argument is that discounts should reflect both customer activity and product economics. A rate that works for one department may be unprofitable in another, even for the same contractor group.
Customer-level sales reports can also give store teams a basis for reviewing account performance and discussing missed purchases. Aylen recommends checking allocations at least twice a year and using buying patterns to identify products a customer may be sourcing elsewhere. The article presents this as a way to pursue additional sales while retaining pricing controls; it does not quantify the likely margin gains or sales growth.
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How the Proposed Plans Work
The viewpoint is part of Hardware Retailing’s “Inside the Margin” series, which Aylen says focuses on sales growth and margin protection for contractor and professional customers. This installment focuses on building customer groups first, then setting the price rules attached to those groups.
Aylen gives examples intended to show why a single percentage discount can misfire. He says a 15% storewide discount for plumbers could be difficult to sustain on hot water units and other high-value, low-margin products; the same discount for painters could lead to losses on ladders. He also describes a retailer’s plumbing plan priced at cost plus 28%: a clamp sold for 94 cents under the plan, while the retailer’s main corporate competitor charged $1.64, according to Aylen.
For new accounts, the author recommends a 60- or 90-day trial group rather than granting the best permanent discount immediately. Customers can be told the criteria for promotion into a regular group and assessed against them during the trial. The article does not provide further details about the retailer examples or identify the businesses involved.
“The main advantage is that you can use it to grow sales.”
— Mike Aylen, industry expert and NHPA strategic consultant
Results and Retailer Details
The supplied article offers guidance and examples but does not report measured changes in sales, gross margin or customer retention following implementation. It also does not name the retailers involved, disclose their sales data, or provide the full category plan referenced in the original report. The recommended group sizes and review frequency are Aylen’s advice, not stated industry standards.
It remains unclear how retailers should set specific discount rates for their own markets, how much analysis the process requires, and how the approach performs across different store formats. The article directs readers to use their own customer and product data but does not publish a comparative evaluation of software versus spreadsheet planning.
Retailers Build and Review Plans
Aylen’s proposed next steps are for retailers to define customer-group criteria, calculate category-level discounts, enter the plans in pricing software or a spreadsheet, and assign customers accordingly. He recommends reviewing customer sales reports at least twice a year, adjusting group placements when buying patterns change, and using trial periods for new accounts before assigning permanent terms.
The article says Aylen will address another subject in the next installment of “Inside the Margin.” It does not specify the topic or publication date, and no further performance data is provided in the current piece.
Key Questions
What is the article recommending?
Mike Aylen recommends grouping trade customers by activity and setting discounts by product category, with regular reviews of customer sales and account assignments.
How many customer groups does Aylen suggest?
For retailers building a system from scratch, he recommends no more than 10 main groups. He says some high-volume customers may need individual plans outside those groups.
Why does the article oppose one storewide discount?
Aylen argues that the same discount can have different effects across departments. It may give away margin on low-margin products or make some items unprofitable, depending on their cost and selling price.
How often should retailers review customer groups?
Aylen recommends reviewing allocations at least twice a year, using sales-by-customer reports to identify changes in purchasing or declining sales.
Does the article show that these plans increase profits?
No measured profit or sales results are reported. The article presents Aylen’s recommendations and examples, but does not quantify outcomes from implementing the plans.
Source: hardwareretailing.com
