Gaining a Competitive Edge with Price
By George Anderson
The latest issue of Competitive Edge offers “a new approach to retail pricing that increases price competitiveness — and drives top-line sales and gross profit dollars — without unnecessarily sacrificing gross margin.”
Jon Hauptman, vice president, Willard Bishop Consulting writes that retailers need to begin by dispelling three myths that govern many supermarkets pricing practices. These include:
- Having to match the prices at competitors to be “at parity”
- Believing that a store’s price image is primarily determined by regular prices on center store items
- Turning to price optimization as the sole answer to correct perceived disparities.
Mr. Hauptman suggests that enlightened retail pricing strategies require:
- Actively managing shelf and promotional prices across the store to enhance a retailer’s total price image
- Objectively determine the value of a competitor’s ads/promotional offerings to respond with a more effective use of your own marketing funds
- Providing pricing value deals in every category (include private label, off-brands, and/or larger packages) to appeal to frugal consumers
- Creating guidelines and rules for category managers to ensure price consistency across the store
- Automating the pricing process using the guidelines and rules developed for category managers.
Moderator’s Comment: How are supermarkets falling short
in their effort to project a competitive price image? What needs to be done
(or can anything be done) to fix this problem?
Anderson – Moderator]