The art, science and role of retail pricing strategies
February 7, 2012 by John Breitinger · Leave a Comment
Retailers in a digital age can’t depend solely on pricing to set themselves apart
Nordstrom recently announced adjustments to its loyalty program; frequent shoppers are eligible for perks like custom shopping parties, in-store fashion shows and as much as $100 in complimentary alterations.
Barnes & Noble unveiled temporary price cuts to its Nook tablets and e-readers for shoppers who buy either People magazine or New York Times Nook subscriptions. And Safeway, Kroger and Stop & Shop are hoping to offset rising food prices by providing gasoline discounts to their rewards members and personalized savings for loyal shoppers.
The days of retailers competing solely on price to drive sales and gross margins are history. There’s still something to be said about EDLP, loss leader pricing and halo effects, but price transparency factors more heavily in consumer decision-making than ever before.
While some merchants can define their pricing strategy in succinct terms (Costco comes to mind), most describe their current approach as one that melds analytics, optimization and personalization with the art of determining which add-ons will click with consumers.
“Retailers are now doing business in a transparent world and the full impact of that has yet to be seen,” says Paula Rosenblum, managing partner at Retail Systems Research (RSR). “In a digitally driven world, things like zone pricing and localized pricing are dying … Retailers have to differentiate their business using service. read the rest (Source: NRF Stores)
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