Why Retail Price Optimization Matters for Merchandising Teams

In today’s competitive retail environment, success isn’t just about stocking the right items or running the right promotions. It’s about strategic coordination — especially between two of the most critical functions in any retail organization: pricing and merchandising.

The demands placed on merchandising teams are immense. From assortment and space planning to promotions, vendor negotiations and margin management. To meet those demands, the smartest retailers are fostering closer collaboration with their pricing counterparts.

Here’s the thing: You can have the perfect product – in the perfect location – but if price is off, even by a little, you risk missed sales, margin loss, or brand erosion.

At ClearDemand, we work with retailers who are bringing pricing and merchandising teams together in more strategic, data-driven ways. We’ve seen firsthand how strong pricing-merchandising partnerships, powered by retail price optimization software, can unlock new growth, increase speed to market, and drive better decisions at scale.

6 Ways Pricing and Merchandising Teams Can Work Better Together

Pricing managers aren’t just number crunchers. When equipped with the right retail pricing optimization tools and insights, they become internal consultants, offering strategic guidance on everything from category pricing strategy and elasticity to customer perception and competitive position.

These two teams often share KPIs: revenue growth, margin rate, price perception, category profitability. In organizations where collaboration is encouraged, the results can be game-changing.

So how can pricing and merchandising teams work better together?

Here are 6 high-impact ways to align and generate beautiful profits in the process:

• Pricing role or strategy by category. The pricing team can assist category managers in how to price certain categories based on their importance to overall strategy, target customers, vendor requirements.

• Good/Better/Best pricing approach. A good analyst can communicate to the merchandising team the rationale behind things like price anchoring or Weber’s Law as well as demonstrate the value behind a sound tiered pricing structure that can be optimized and tested.

• Product attribute pricing. There’s no shortage of available data. Smart retailers are capturing product attribute information that can be used in concert with sales history to determine a customer’s willingness to pay for certain features or benefits. You can uncover insights like how much more a customer would be willing to pay for an Energy Star branded light bulb and then forecast the increase in gross margin by pricing it more appropriately to real demand.

• KVI selection. These are the items that drive traffic, expand market baskets, and reinforce your value in the eyes of consumers. You can help the merchandising team better understand the implications of price changes or promotions to these items and make sure that all tactical changes are aligned to overall corporate strategy.

• Establishment of pricing rules. Rules can enable consistent and scaled growth, or they can inhibit margin opportunity if they are too restrictive. You can work collaboratively on defining the right balance. 

• Competitive price benchmarks. A good pricing team can serve as the eyes of the retailer and ensure that the organization is constantly apprised of competitive pricing across all channels. 

This list is by no means exhaustive, but it is very illustrative of the profitable synergies created when there is real alignment between the pricing and merchandising functions. 

The Role of Retail Pricing Software in Merchandising Success

Retailers are awash in data, but data without structure is just noise. That’s where retail optimization software comes in. The right tool transforms data into science-backed insights that merchandising teams can act on.

Modern retail price optimization software helps teams:

• Identify key value items (KVIs) that drive traffic and loyalty
• Understand elasticity at the category and product level
• Optimize promotions to protect margin and perception
• Test scenarios before implementing price changes
• Connect pricing rules to assortment and promotional plans

By integrating pricing science with merchandising strategy, retailers can operate as one cohesive team, making smarter decisions that resonate with shoppers and improve profitability.

For merchandising leaders, price optimization is more than a pricing tool, it’s a competitive advantage. It provides clarity into how pricing decisions ripple across categories, vendors, and shopper behavior.

When merchandising teams have access to real-time elasticity and competitive insights, they can:

• Forecast the impact of price changes on margin and volume
• Plan promotions with confidence
• Defend decisions to vendors with data-backed rationale
• Strengthen category role definition and brand positioning

Ultimately, price optimization empowers merchandising to be proactive rather than reactive – anticipating shopper shifts and cost pressures before they affect performance.

Collaboration Drives Profit

These areas are just the beginning. When pricing and merchandising teams work together – with the right tools and shared data – the results are remarkable:
✅ Better decisions
✅ Faster execution
✅ Stronger margins
✅ A shopper experience that builds loyalty

Want to see how your teams could work better together?
Let’s talk about how ClearDemand can support both pricing and merchandising with powerful, integrated retail science.