Comprehensive Retail Pricing Strategies & Market Dynamics

What makes price complicated

it varies by location

What factors into price

Weather, demand, competition, labor costs, bulk?

Bottle Bill (1980s)

nickel/can/bottle, refundable at point of purchase

Pros of bottle bill

encourages recycling

reduces littering

keep profits

Who was late to the bottled water market

pepsi and coke

AUR stands for

Average Unit Retail

what is AUR

the average selling price for an item within a specific period.

what factors into AUR

added features, variety, premium benefit, etc

price gouging

Charging excessively high prices to desperate customers

high/low theory

A product is brought in at a high price with the intention of selling it at a discount

Pros of high/low

create illusion of value, "get a deal", use of coupons/discount codes, discounts are addictive

black friday

day after thanksgiving, unofficial start to holiday shopping season, famous for deals

why are consumers skeptical about black friday deals

because is it an "actual deal"

EDLP stands for

every day low pricing

pros of EDLP

simplier, cheaper (less staffing and ads)

Who switched from high/low to EDLP

Wegman's

Why was the way Wegmans changed pricing strategies so good

constant communication with the customer, gradually reduced coupons, highlighted low prices, in store ads

What did wegmans advertisise in EDLP

private brands, localization, "big game", BBQ season, farm fresh produce, healthy customers (dropped cigs)

loss leaders

selected items sold at a loss to attract customers to buy costlier goods

examples of loss leaders

milk, costco chicken

when will retailers take a loss

when an item is slow selling or about to expire (target dresses)

cons seasonal products

Little shelf, loses value based off calendar, seasonality,

pros of seasonal products

priority placement in stores, localization

Spirit Halloween

pop up shop for a specific time period

challenges of spirit halloween

staffing, filling and emptying store, finding locations

pros of spirit halloween

increased exporsue, cheaper then opening stores in major cities

liquidate

merchandise sold below cost to completely get rid of

ways to get feedback

consumers voting with their dollars, physical comments, online reviews

rate of sale

Pace at which an item is selling

ways to increase ROS

adjust price, target different market segments, increase advertising, change location to increase visibility, use influencers, change position on shelves, mannequins

what is the ROS last resort

adjusting the pricing

sales curve

a way to determine how much to buy

what do you look for the sales curve

sales history, a specific quarter

lookback/ diary notes

look at what went well and what can be improved

what to look at for a lookback

Attendance, attendee demeanor, what got used, what did people like, overall sales

competitive shopping

what are your competitors doing

what do you look at when competitive shopping

layout, similar item pricing, avaliability, customer service, pricing, promotions, key statements (where are they investing)

special markeups (SMUs)

unique style for each retailer for national brands

Why do nation brands use SMUs

so cusomters cant directly price match

Whats up with aldi

german/EU design, quarter to use cart, items sold in boxes, no music, less displays/signage, limited number of employees, pack your own grocery, cashiers are sitting, lay money verticaly, limited items

why does aldi do all this

to decrease costs and increase speed and effciency

why do retailers use a high/low model

create illusion of a deal and deals are addictive

who follows a EDLP

aldi, wegmans, target, walmart

factory outlet

sells specific brands at a discount- either out of season or overstock

whats so special about outlets

people love a deal, brands will have SMUs, major portion of a brands business

off-price retailer (tj maxx)

known brands at a cheaper price, fast growing category

why do people like tj maxx

thrill of a deal, you never know what youre going to get, always new and different stuff

reverse logistics

The process of moving goods from their final destination (customer) back up the supply chain to point of orgin for recovery, repair, recycle, resale, or disposal

ex of reverse logistics

amazon uses whole foods and khols to take returns, no handeling fees and customers get a store coupon

what if reverse logistics isnt done right

can be expensive and errode profit

what else can reverse logistic be used for

cardboard, plastic, cans, etc

pouring rights

The exclusive rights of a beverage maker or distributor to have its products sold at a particular venue, event, or institution.

what goes into airline pricing

Time of day, day of week, season, demand, how far in advance you book, layover?, what class, checked bags?