The financial market seems to be changing daily, the political sector seems uncertain and the economy is shaky. It is time for action.
Retailers will be thinking of numerous tactics that they can adopt to grow gross profit.
Over the last few years we have seen a decline in sales and profit which have drained many businesses, the continuous sale will not be the long term remedy.
There comes a point where it is time to raise prices and I believe now is the time. In no way am I suggesting this is the only strategy that needs to be introduced to grow sales and profits, but I do believe it should be one of the tools in the kit to grow business.
Looking at businesses around the world I do believe now is the time to really look at you price strategy.
I know I am not the only person promoting price increases, Robert Craven of the Directors Centre Business Club in his recent newsletter promoted the same message as a means of business growth.
Before you go any put the price up on every product in the store, let me explain why I feel it is necessary and what you should be looking at.
1. Relook at Your Price Points
We are all aware that consumers have price barriers in their minds when shopping for non known value products. The key to pricing these products is to ensure that the product is priced at the right price point below that price barrier.
I come across retailers who, in reality, are giving customers money back as the customer has worked on the price barrier in their mind and the retailer has placed the price point to low below that barrier
2. Price based on “Value” rather than Commodity
I recently visited a garden centre, they sold parsley, an easy to grow plan in a container for 2.99. Also on sale was what the salesperson told me was the rarest tree in the country and that they only had 10 available.
These were priced at 4.99. When asked why they were so closely priced, I was given a strange look and told that the rare tree was in the next pot size up and had to be priced accordingly. Are you a commodity price retailer or a value priced retailer?
The lesson is put a price on rarity It is the “Value” retailers who will grow sales in the long run.
3. Bundle Products to Provide Solutions
Customers are not looking for commodity products they are looking for solutions. Put the right collection of items together from different categories and promote the solution and you can then price the product accordingly. This worked exceptionally well for some food retailers when they started to promoting meal solutions rather than items of food.
The consumer was provided with an idea and was prepared to pay for the reduction in “thinking time”
4. Package it in Upmarket Wrapping
I am always amazed at the elaborate wrapping used in Japan to get premium price for a product. We can learn a lot from these Japanese retailers.ir a product is not selling perhaps it is presented in the wrong way.
Improve the wrapping and sales could increase and you may be able to raise the price.
5. Sell the benefits on the Sign
In my conference presentations I keep hammering home the message that we need to tell the consumer about the product. We assume that they know what it is and how to use it. Most consumers do not know the product and need three benefits on the sign to engage them in the product.
Rethinking through the signage on products could allow you to put the price up, it will definitely increase product turnover.
6. Always put prices up with inflation
Consumer expects you to put prices up with inflation, but this needs to be a gradual process. If you put the price up at one big hit, it will be noticed and commented on. It may result in a customer backlash, but putting prices up gradually is expected and sound business sense.
7. Remember Your Time is Money
More and more retailers are rightly providing more services for the consumer as appoint of difference. Your team and your time is money and the customer should be paying for these services, I come across retailers that gift this time in for free. The customer expects to pay for professional advice, do not disappoint them.
As we move into an interesting period in our business lives, now is the time to look at your price structure and take e the appropriate action.
John Stanley is a retail conference speaker and consultant. He can be contacted at firstname.lastname@example.org.