Yesterday, Software Advice released an IndustryView report: “The Best Retail Pricing Strategies by Sector.” I was particularly interested in this report, which was based on the results of a recent Software Advice survey, as I continue to run the In The Pink chain of Lilly Pulitzer Signature stores here in Massachusetts, as well as help other retailers with pricing and promotional strategies via Springboard Retail. I was fortunate enough to have the opportunity to chime in and give share some of my thoughts in the report (thank you, Michael Schrantz).
The report talks about the links between properly priced inventory and customer loyalty. Retailers need to use data – hunches no longer suffice – to understand how various pricing and promotional strategies perform in order to make informed decisions. Doing so keep customers engaged and happy, and keeps corporate happy with higher performing stores with less inventory overhang that drag on profits. The report provides insights on how to do so through the use of various retail technologies, which is helpful as the landscape of vendors continues to change. Retailers are inundated with options and it can be overwhelming to navigate the software landscape. This report can help.
The key findings include the most popular pricing strategies by top retail sectors, as well as the percentage of retailers currently using software to manage product pricing. Only 39 percent - I was surprised we weren’t at least at the 50 percent mark. Retailers need to embrace technology quickly, or risk getting left behind. At In The Pink, we use data and software to deploy various pricing and promotional strategies to meet different goals throughout the year. As I say in the report, discount pricing is dominant because everybody wants a bargain. It’s part data, part human psychology. The key is to find the sweet spot where customers find a bargain and retailers maintain their margin. For this you need the data.
Once again, J.C. Penney is held up as an example of the impact of changing retail strategies. The lessons learned from their pricing change experiment in 2013, combined with the insights provided in this report, can certainly help today’s retailers understand the different types of pricing strategies and the environments in which they are effective – or ineffective.
The report highlights:
- Definitions of the most effective pricing strategies
- The different types of pricing strategies retailers are employing
- A breakdown of discount pricing across all sectors
- The most effective discounts across sectors including department stores, specialty retailers, grocery retailers and e-commerce retailers
- The use of pricing management software
- A review of retailer demographics in the survey
Topics: Business of Retail