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Mike Aylen, an industry expert and NHPA strategic consultant, says hardware retailers can use customer groups and department-specific price plans to tailor contractor discounts. His advice includes reviewing customer sales at least twice a year, testing new accounts before assigning permanent discounts, and avoiding broad discounts that can cut margins or create losses on particular products.
Hardware Retailing has published the fourth installment of its “Inside the Margin” series, in which industry expert and NHPA strategic consultant Mike Aylen advises retailers to tailor contractor discounts by customer group and product category. The viewpoint argues that this approach can help stores pursue more customer business without relying on broad discounts that may erode margins or price some items below cost.
Aylen recommends retailers starting from scratch keep their main customer groups to no more than 10, with separate plans added when individual customers’ volume warrants them. Groups should reflect the store’s market and current customer base. Examples include plumbers, painters, builders, concrete workers, property maintenance firms and local councils.
Before assigning a customer to a group, retailers should define the criteria, including the customer’s day-to-day work and whether sales volume will determine the discount. Aylen describes a retailer that divided plumbers into large, medium and small groups, with discount rates tied to monthly sales. He also says loyalty can matter: a customer who buys all their business from a store could be rewarded even if their sales volume would otherwise place them in a middle tier.
Aylen recommends reviewing customer allocations at least twice a year, using sales-by-customer reports to spot changes and follow up on declining sales. He also advises estimating a customer’s potential spend, identifying products they buy elsewhere, and discussing whether the store can meet more of their needs. New customers, he says, can be offered a 60- or 90-day trial group rather than receiving the best permanent discount immediately.
Avoiding Discounts That Cut Too Deep
The pricing method matters because one discount rate can have very different effects across products. Aylen cautions against applying a global discount across all departments: it may be too generous on items where the store already has limited margin, while failing to offer a useful price on other goods. He says retailers should calculate discounts by department and, where needed, by class, fineline or individual SKU.
Aylen’s examples illustrate the risk he describes. A retailer offering plumbers 15% off across the board could lose money on hot water units, while the same discount for painters could put some ladders below cost. In another case, a plumber plan set at cost plus 28% resulted in a clamp priced at 94 cents, compared with $1.64 at a major competitor, according to Aylen. These examples are from his consulting experience, not independently audited comparisons in the supplied material.
For retailers, the practical consequence is a balancing task: discounts need to be attractive enough to encourage more business, but specific enough to avoid unnecessary reductions on products where customers might pay more. Sales data and periodic reviews can help a store adjust its plans as customer activity changes.
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From Customer Groups to SKU Rules
The article is presented as the fourth piece in “Inside the Margin”, a series about growing sales and protecting margin among contractor and professional customers. Its focus is not a new pricing product or a reported industry-wide change; it is operational advice from Aylen on building and maintaining retail price plans.
Aylen says stores can use pricing tools such as Margin Master or Epicor Pricing Planner to examine department prices and test discounts. Retailers without those systems can use Excel, he says. In either case, the recommendation is to check the resulting selling prices and disable rounding when calculating discounts off retail prices, then adjust rates at more detailed product levels where needed.
Once a retailer has settled its group and category rules, Aylen recommends entering the plans into its system and allocating customers accordingly. For any SKU-level exception, he warns against locking the plan to a fixed price and says to use an expiration date, allowing the exception to be revisited rather than left in place indefinitely.
“The main advantage is that you can use it to grow sales.”
— Mike Aylen, industry expert and NHPA strategic consultant, in Hardware Retailing
No Storewide Results Reported
The source is an industry viewpoint, not a study reporting measured results across hardware retailers. It does not provide data on how many stores use these plans, the typical margin change, or the sales gains retailers might expect. Aylen’s examples are attributed to his experience, but the article does not identify the retailers or provide supporting records for the comparisons.
The article also does not specify discount rates that would suit every market or product mix. Those decisions depend on each retailer’s costs, customer purchasing patterns and competitive conditions, details the source does not quantify. It remains unclear whether the advice will be tested or followed by any particular retailer.
Retailers Must Set Review Cycles
Aylen’s proposed next steps are for retailers to define group criteria, calculate category-level prices, and assign customers to plans. Stores following his advice would then use sales reports to review allocations at least twice a year, investigate declining accounts and adjust plans when customer activity changes.
For new accounts, the suggested 60- or 90-day trial gives a retailer time to assess whether a customer meets the conditions for a permanent group. Any SKU-specific exception should carry an expiration date. The source announces no further policy, research or company action; the next developments depend on whether individual retailers adopt and evaluate the approach.
Key Questions
What is the article’s main recommendation?
Aylen recommends setting contractor discounts by customer group and product category, rather than applying one rate across every department. He says that can help retailers target customer sales while limiting unintended margin losses.
How many customer groups does Aylen suggest?
For a retailer building a system from scratch, he recommends keeping the main groups to no more than 10. Separate plans may be added for individual high-volume customers.
How often should customer allocations be reviewed?
Aylen recommends reviewing allocations at least twice a year using sales-by-customer reports. He says declining sales can prompt a conversation to find out why the customer’s purchases have changed.
How should a retailer handle discounts for new customers?
He suggests placing new customers in a 60- or 90-day trial group rather than immediately granting the best permanent rate. The retailer can explain its criteria and assess whether the account meets them.
Does the source show that these plans increase margins?
No. The article offers advice and examples from Aylen’s experience, but reports no measured results across retailers or quantified margin gains.
Source: hardwareretailing.com
