BOGOF
Yes, that is right. 
It is all driven by volume; how many units the retail company has purchased, probably many tens of thousands across their empire, at a unit price that allows for such a seemingly crazy offer that you, and everyone else, starts talking about and the retailer hopes will drive thousands of customers into their stores!
It is great marketing that 'tells' the customer this retailer gives them 'fantastic offers', with two units being 'given away' for the price of one, so what other promotions are on offer in store? In fact they retailer has negotiated a unit price from the supplier that still gives them a great profit over the tens of thousands that will be sold when each is sold for just £2.50. The all important customers are happy and so is the retailer as other products are sold on the back of the extra footfall. That gives any retail company the yearly growth the business must generate to remain competitive and viable.
Smoke and mirrors Ron, smoke and mirrors!! 
With Poundland and the like it is still a big increase on "everything being £1"!! That is one reason why Poundworld and many 99p stores have gone to the wall.
Well said and explained Lizzie But of course this is all driven by the marketing people, and they do not always get things right.
I'm in the wine trade. I recently saw wine in Lidl at £2.99 a bottle
Minus VAT = £2.49
Minus Excise duty = £0.32
Trust me at .32p per bottle nobody is making any money, not even the empty bottle manufacturer
I recently met a senior manager from Lidl. He had no idea that excise duty was £2.17 per bottle. I just wonder 
Yes, it is not a lot per unit. But in multiple retailing it is all about just that; multiplication.
That 32p per bottle turns into x12 per case, x 30 cases per store (probably a very big underestimate!) x 10,000 stores that Lidl operate worldwide = £792.000 for just one simple product. Then you take into account that Lidl run their stores with minimal staffing, so keeping the major selling expense of the wage bill at the lowest level, whilst putting out unpacked cases of product direct onto the shop floor. Then as I stated before, there is the pulling power of the promotion that will continue to draw in the regular and, they hope, extra custom that will give the company year on year growth. Like Aldi, Lidl specialise in giving the customer the cheapest possible deal, regardless of product source and quality, which they promote very aggressively through TV and general media advertising. That is why their market
has been growing fast, but their profits have been hit, in part by increased staffing costs, store expansion, but also by their marketing policy. The cost of selling cheap and fighting, in Britain at least, the other big 4 supermarket chains will ALWAYS effect these retailers profits in the long term, like it affects all retailers who try it. My old company Chairman always did use as a manta the message "you cannot buy sales" and he was absolutely right.
Any retailer who ignores the need to make profit their number one target is in real danger of going out of business, just as so many have in the past.
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Topic: Lizzie, please explain..... (Read 4920 times)