Retail Hero: Pricing now has combined art with science. There are no formulas for pricing and keystone is dead! Manufacturers can make all suggestions they want but flexibility has become the most important word in the pricing scenario. It is the job of the retailer to be informed and have the flexibility and understanding to price the merchandise at the highest possible price for the fastest rate of sale and still make money. You must test and try various price levels but you must also be able to maintain price integrity. Information is vital to have the right merchandise at the right price in the store all of the time.
Some level of automation is always necessary in the price decision making process, especially when it comes thousands of items in inventory, multiple vendors with different costs, seasonal fluctuations and other aspects. Your retail system should be allowing you to do the following:
- Help in adjusting retail prices after ordering but before the merchandise hits the floor
- Program "if you buy this, you get this price" scenarios
- Give discount incentives to preferred customers
- Measure the effectiveness of loss leaders
- Test prices at various levels
- Help in understanding the margin implications with your pricing decision by style, model, category or department
- Help in producing special event pricing tags for special sale and/or members only preferred customer pricing.
If you see that more than four criteria are not met, you may be wandering in darkness when it comes to your pricing strategy. You may not know, or disregard the knowledge of loss leaders which can be a spark that ignites a business. They can affect the rate of sale of full priced merchandise as well as other merchandise in the store. They can increase traffic and even be classified as a part of the promotional budget. But they only mean something to the retailer who has the information and knows what to do with it.
If you don't make special tags for merchandise you don't know the price range capabilities of the store and location and don't use the price tags as promotional vehicle. This isn't type of store people like to shop in. If you're not going to take care of your best customers and not offering price incentives there is no way you have the right amount of merchandise in the store or merchandise that will appeal to your customers.
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