Retail pricing activity has drastically changed throughout the past few years, with much greater emphasis on promotional pricing. Remember the days when you relied on products being priced at ‘regular price’ to communicate its overall value? Consumers are spending more time than ever, online price shopping, to ensure they get the best deal. They are often expecting (and sometimes requiring) to find some type of discount. Retailers need to work harder and smarter than ever to share product value proposition, while remaining competitive, relevant and profitable.
• How many retailers today sell their products at regular price? What makes these unique retailers different than others?
• What strategies are available for retailers to try, in order to avoid putting everything on sale, 24/7?
• How do retailers analyze their pricing results in order to make improved business decisions?
Read on to learn more about strategies retailers can use, to increase customer response, and drive not only top-line sales, but bottom-line profits.
Power to the Connected Consumers
Online shopping has significantly shifted the power to the consumer. I remember the days of pricing an assortment based on cost of goods and a markup percent. This no longer works! It is critical that retailers focus on what the customer will pay for the item, how competition compares, and how to communicate price/value message.
Regular Price Strategies
How can retailers differentiate themselves from competition and how can they avoid falling into the promotional pricing trap? Just think of all the retail companies today, where they are ALWAYS 30% off? Following are a few strategies for keeping customers coming, while avoiding discounting:
1. Flow of newness
o Always something new in stores or online
o Limited quantities
o Customer desires latest and greatest
2. Differentiated Products
o Can’t find product anywhere else
o Online or in-store only product
3. “How To” & Exceptional Services
o Share how to use or wear
o Product Service Support – best in class
4. Personalization & Upsell
o Upon past customer purchase, personalized messaging with specialized discount for add on sale
o Personalized reach out to engage customer
Don’t Give Away the Farm!
What are some ideas on how to create in store and online traffic and conversion without extreme discounts on entire assortment?
1. Move assortments into the following discount categories. Products you will:
o Never discount
o Rarely discount
o Sometimes discount
o Often discount
o Discounted everyday
2. Build assortment to fit into the above. Create product test assortment as way to introduce newness and keep messaging fresh. Make these available for limited time and limited quantities
3. Create a detailed calendar that includes:
o Holiday events
o Promotional events
o New product launch dates
o Test assortment dates
o Seasonal/holiday product sets
4. Insert additional events to drive traffic to online site
5. Build in stores events to introduce new product or share “how to wear or how to use”
6. Never put your entire assortment on sale!
o Customers will clean you out of all newness
o Your basics will be depleted
o The product that did not sell before, will remain
7. Be ok with creating aggressive clearance events – with consistent cadence. Price it to sell it vs. coming back and having to manage markdowns time and time again
Use Data to Determine Pricing Effectiveness
What data do you need to analyze and evaluate whether your regular-priced, promotional or clearance event was successful? Ensure you have access to and use your data to plan, monitor and adjust your pricing strategy. As a result, below is a list of metrics to track:
It is critical to look at customer behavior by individual channels and across all channels. Look for patterns of behavior by regular, promotional and clearance sales activity.
Differentiate and Data Analysis
How do you differentiate your product assortment/services versus your competition? Make product and service be front and center, not price. Use your data to analyze how you are doing and react to customers’ response. Try new ways to connect with your customer, in a personalized manner.
Download the eBook. Learn the Do’s and Don’ts to ensure your retail inventory strategy aligns to your assortment and how to create a retail assortment presentation that’s appealing to customers
EBOOK: RETAIL ASSORTMENT PLANNING OPTIMIZATION