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In a Hardware Retailing industry viewpoint, consultant Mike Aylen outlines how hardware retailers can build customer groups and tailor discounts by category. His recommendations include reviewing groups at least twice a year, testing new-customer offers, and using expiration dates for SKU-level exceptions. The article presents advice, not evidence of results from a measured retailer-wide study.
Hardware Retailing has published a viewpoint by Mike Aylen, an industry expert and NHPA strategic consultant, advising retailers to assign contractor customers to defined groups and set discounts by product category. The recommendations are intended to help stores pursue more customer business without applying broad discounts that could reduce margins on lower-margin products.
Aylen’s article is the fourth installment of the publication’s “Inside the Margin” series. It focuses on building customer groups before setting category price plans. For retailers starting from scratch, he recommends keeping the number of standard groups to 10 or fewer, while allowing individual plans for customers whose volume calls for separate treatment. Examples of possible groups include plumbers, painters, builders, concrete workers and property maintenance businesses.
The criteria for assigning customers should reflect their activities and, where relevant, their sales volume. Aylen describes a retailer that divided plumbers into large, medium and small groups using monthly sales. He recommends using current customer sales reports to allocate accounts and reviewing those allocations at least twice a year. If a customer’s sales fall, he says, the retailer can use the change as a reason to contact the customer and ask what has changed.
For new accounts, Aylen advises against immediately offering the highest discount tier. Instead, he suggests explaining the retailer’s criteria and using a 60- or 90-day trial group to see whether the customer meets the requirements for a permanent plan. He also recommends calculating discounts separately by department, then by class, fineline or individual stock-keeping unit where needed. Retailers can use pricing software or a spreadsheet, he says, but should avoid applying a single discount across all departments.
How Targeted Discounts Protect Margins
The advice addresses a practical tension for hardware retailers: contractor accounts can bring recurring sales, but discounts that are too broad or too deep can make some transactions unprofitable. Aylen’s examples show why a plan that looks simple at the account level may have different effects across product lines. A plumber’s purchases can include low-margin, high-value items, while a painter may buy ladders that do not support a large blanket discount.
Category-level plans can give retailers a way to distinguish between products and customer relationships rather than applying one rate everywhere. Aylen says customer data can also help staff identify products an account buys elsewhere and discuss whether it might purchase more through the store. That is a proposed sales approach, not a reported guarantee of higher revenue or profit. The article does not provide audited performance figures or a comparison of outcomes before and after adopting the plans.
For store operators, the practical implication is that discounting needs regular review and product-level checks. A customer’s loyalty or sales volume may support a favorable offer, but the retailer still needs to understand the margin on what that customer buys. The same discipline applies to exceptions: Aylen advises against setting SKU-level exceptions at a fixed price without an expiration date.
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From Customer Groups to Item-Level Rates
Aylen frames the process as a sequence. Retailers first define groups using their existing customer base, then set criteria for membership, and only after that determine discount rates for each group. He says group definitions can reflect the type of work customers do, their sales, or both. He also notes that some customers may warrant an individual plan based on volume, outside the suggested limit for standard groups.
The article cautions against assuming that a uniform percentage off retail will work across product departments. Aylen gives examples of a 15% global discount potentially eroding returns on hot water units or resulting in ladder sales at a loss. He also recounts a retailer using a plumbers’ plan at cost plus 28% across plumbing items; in his example, a clamp priced at 94 cents compared with a competitor’s $1.64. These are examples supplied by Aylen, not independently verified market comparisons in the article.
Aylen names Margin Master and Epicor Pricing Planner as software options for assessing department-level prices, while saying the work can also be done manually in Excel. He recommends turning off rounding when testing discounts against retail prices so the resulting rates can be evaluated accurately. Retailers can then decide whether a department-wide rate needs more detailed adjustments at the class, fineline or SKU level.
“Limiting the number of customer groups will make it easier to do regular reviews of the activity in each group and make the necessary adjustments when needed.”
— Mike Aylen, industry expert and NHPA strategic consultant
Evidence Behind the Pricing Examples
The source is an industry viewpoint offering consultant advice, not a formal study. It does not report how many retailers use these methods, quantify their effect on margins or sales, or compare performance with other pricing approaches. Aylen’s retailer examples are presented in his article; the supplied material does not include independent verification, retailer names or dates for those cases.
The article also does not set a universal discount rate or provide a complete template of group criteria. Appropriate terms would depend on each retailer’s costs, product mix, customer behavior and local competition. The supplied source material does not state the article’s publication date, so its precise timing cannot be confirmed here.
Retailers’ Next Pricing Reviews
Aylen’s recommended next steps are for retailers to define customer groups, establish measurable membership criteria, and calculate rates by department before adding finer product-level rules. They can then assign customers, monitor sales and revisit allocations using customer reports at least twice a year. New accounts may be tested in a 60- or 90-day group before receiving a permanent discount tier.
Retailers following the advice would also need to review item-level exceptions and set expiration dates, then check whether discount levels remain appropriate as costs, customer purchases and competitive prices change. The supplied article does not announce a product launch, policy change or scheduled industry event; Aylen says the “Inside the Margin” series will continue with another topic.
Key Questions
What does Aylen mean by a category price plan?
It is a pricing approach that assigns customers to groups and sets discount rates by product department or, where needed, by class, fineline or individual item.
How many customer groups does Aylen recommend?
For retailers starting from scratch, Aylen recommends no more than 10 standard groups. He says some high-volume customers may need individual plans in addition to those groups.
How often should retailers review customer allocations?
Aylen recommends reviewing group activity and customer allocations at least twice a year, using sales-by-customer reports to identify changes.
Why does the article discourage one discount across all departments?
Aylen says product margins and price sensitivity vary. A blanket discount may cut returns on low-margin or high-value items, or give customers a larger reduction than needed on other products.
What does Aylen suggest for new customers?
He suggests explaining the criteria for permanent groups and using a 60- or 90-day trial period before assigning a new customer to a permanent discount tier.
Source: hardwareretailing.com
