This is an update of a popular blog post from 2013.

An employee discount is one of the least expensive “perks” you can offer, so it pays to be generous.  It helps you attract and keep good employees – and we all know the high cost of finding and training a new staff member.  

At our shop, we offer our employees all merchandise at cost plus 10% –  and we only add shipping if the item is particularly expensive to receive.  There are several reasons why offering as great a discount as possible to your valued staff members makes sense.  The first is that it generates employee loyalty at a very low cost. After all, if I pay $5.00 wholesale for an item, plus some freight expense, the staff member’s payment of $5.50 reimburses me for my entire investment, with very little other cost involved.  (We do ask staff to pay for any gift boxes or wrapping.)  Paid vacation days, health insurance and almost any other benefits are expensive, especially if offered to both full time and part time staff members.  Why not offer everyone a generous discount, since it is almost free?

The second reason to offer your employees a good discount it encourages them to buy the merchandise they will be selling. Owning an item is the ideal first step to being able to sell it well.  My employees who use our kitchen tools know a lot more about it than most of the rest of us do, and get really excited telling customers about the new introductions. Staff members who have personally tried a new item can speak more authoritatively than those who have not. Customers are much more likely to buy something after hearing “I have that myself and just love it.”  There’s no better sales pitch!

A few of our suppliers are wise to the fact that a strong recommendation by a sales associate is their best selling tool, and offer a special discount on staff purchases.  Which line of earrings would you recommend if you were a sales associate — the one that made it possible for you to own two or three pairs to wear to work, or another that sent the shop a free display?

The last reason to offer a generous discount is to cut down on employee theft. No one likes to think of their employees as stealing from them, but statistics show that internal theft (“the five finger discount”) can be as big a threat as shoplifting.  By encouraging employees to buy at a very low cost, you are less likely to be plagued by an employee tempted to take something without paying for it at all.

Be sure to mention your generous discount policy when recruiting new employees.  You may find that this is a “perk” that will motivate individuals who love your merchandise to join your team.  And sales people who love the merchandise really enjoy selling it, leading to greater success for your staff and for your store.

Happy Retailing,

Carol “Orange” Schroeder