Retailers are in a real pickle when it comes to pricing strategies and solutions. Retailers are facing:
- Increasing obsolescence. In many cases,pricing situations, systems and practices are not sufficiently strategic or sophisticated. We are sensitive to the prevailing resistance to change and perceived business disruption – but technology has minimized this as well. Status quo is not a good strategy.
- Competitive complexity. Competitive complexity has increased with more players; increasing assortments; promotional expectations and complexity, and the desire for an ‘interconnected’ pricing environment.
- Need for speed. Demands for faster and smarter pricing decisions. In one recent RIS News study, roughly half (51.3%) of surveyed retailers said they would change prices every four hours if they could.
We could list more, but these offer some common perspectives on the pricing pickle faced by retailers. Here, we offer three initial pricing recommendations that move from pickle to profitability.
Three Pickle-Free Pricing Practices for Retailers
#1/DO something and start small. It’s a first step into examining your retail pricing approach. For example, use pricing science to re-visit your most sensitive products and examine your true competitors. Study what’s in your shoppers’ baskets. Find where there is profit in your assortments. This ensures a more strategic approach with a focus on the low-hanging fruit.
#2 DON’T over-react to competitive prices. Price matching is not sustainable or necessary. It will drive traffic – but at the expense of margin. Go with a more proactive vs. reactive pricing approach. Be strategic. Use the gold nuggets within the data you already have. Your shoppers and shareholders will notice.
#3 DO follow your rules. Discussions about rules-based pricing rules may seem mundane. But they aren’t. Rules must be defined, maintained and monitored to prevent pricing inconsistencies, profit erosion and shopper confusion. The good news: any evolved pricing system worth your investment focuses on rules first. They should always be easy to understand, create and implement.
In the end, fight the status quo. Attack obsolescence, and don’t let your competitors change the way you run your retail operations. Take control back, use your data to reveal critical insights about your shoppers, products and competitors and respond thoughtfully. No more pricing problems. And no pickle. That’s the good news for retailers.