Retail Observer

RETAILOBSERVER.COM JUNE 2015 50 T here has never been a time when pricing—I mean the right pricing—has been more critical. The days of tagging your floor at some inflated MSRP and then negotiating with your prospect until they give in are over. Believe it or not, customers didn't like it then and they won't tolerate it now. "But our customers all want a deal!" No, they all want value. And with today's technology, transparency is an absolute. No more hiding behind manufacturers' inflated opinions about the worth of their products. New digital in-store price tag technology twinned with sophisticated monitoring of market pricing minute by minute ensures that some retailers really do have the lowest prices. Nebraska Furniture Mart's new Dallas mega-store has deployed digital pricing on 100,000 items. Prices change twice a day after staff monitors 18 competitors including Amazon, Home Depot and Wal-Mart. The store will match prices and offer an additional 10 percent discount if shoppers find a lower price. To those vendors who demand and enforce some kind of UMRP (Universal Minimum Retail Price) I say hooray! Their playing fields are even and customers choose where to buy based on service, selection, delivery and reputation not just on price. In his book Bootstrap to Billions, Dileep Rao found that 50 percent of the more than 2300 world-class entrepreneurs he interviewed succeeded despite higher prices than their competitors. They offered more and knew how to sell that value. An additional 25 percent excelled in merchandising, using low prices on a few items to attract customers and pricing other items higher to ensure profits. Your mission—should you choose to accept it—is to define your pricing strategy. You can be a low price leader if you have low expenses and great efficiencies. Think Costco or any other warehouse club. You can also choose to be higher priced if you offer pricey amenities that increase value. Country clubs offer more than city golf courses— better locker rooms, less crowded courses, more available tee times. Or, you can compete using a combination of low-priced products to create footsteps to your door and a great engaging sales experience that can demonstrate the benefit of higher priced goods. Instead of dropping prices, your associate can seamlessly move their prospects into goods that meet their expectations. Does your experience look and feel like it can command higher prices? Nordstrom just feels different than Wal-Mart. Is part of your value offering snacks and bottled water, coffee or soda as prospects arrive? Are they greeted and welcomed into your store? Is your store spotlessly clean, well-lit and inviting? Or, does it look like a bargain basement operation? Prices are most competitive—and lowest—on commodity items. If a customer really wants that product—a second refrigerator for the basement or a laundry pair for a rental—give them the best deal they can find anywhere. And do it graciously. Maybe you can sell a damaged or returned product and create a win-win for you and your consumer. You may not generate much profit but you can create a customer for life. Value is not determined by how much you pay to purchase a product. All too often, I see a sales associate run to the computer, check the cost of the product they've demonstrated and then calculate a "special" price for the customer in order to achieve some pre-determined margin. When that happens, you don't get the extra profit you should from a special buy you've made. Everything goes out at the same low margin. Two products costing the same might sell for the same price even though one has lots more benefit than the other. Can this item save me time, money or energy? If so, that's value. Is it better designed for ease of use, safety or longevity? If so, that's value. In buying from your company, do I get more value than from other dealers? Do your online reviews illustrate your prompt service, white glove delivery and exceptional customer satisfaction? Does your installation include an inspection of other products to ensure you don't have leaking hoses or gas valves? Does every purchase over $500 include a gift card for $50 on another purchase by that customer or her friend? Finally, offer a price guarantee. Customers will feel comfortable with the price they paid and few ever come back for a rebate. Price isn't everything but it's a lot. Don't gamble on being smarter than your customer. Know your customers and assort products that mirror them. Develop a good, better, best merchandising plan so that you have options at the right price points. Treat your customers the way you want to be treated. PRICE ISN'T EVERYTHING— BUT IT'S A LOT Elly Valas Retail Views Elly Valas is the Marketing Services Director for Nationwide Marketing Group. She can be reached at elly@ellyvalas.com or at 303-316-7569. Visit her website at www.ellyvalas.com. RO

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