Retail - Industry Trends Analysis
When it comes to sales, retailers everywhere are struggling to compete with Amazon and Walmart. But if you think that lowering prices is the only way to deal with this issue, then think again.
Retailers face several challenges when trying to increase sales, and price sensitivity is just one of them. You will have to master all or at least most of these challenges to make good sales. Read further to learn what these challenges are and why lowering prices is not necessarily the only solution to increase your sales.
If you want good sales, then it is important that you gain a deeper insight into everything. Many people think that price is the biggest issue, but this isn’t true. As a retailer, you should be a lot more concerned about competitive differentiation, in-store service, and customer satisfaction.
You will have to make sure that you understand why people prefer some other brand compared to yours before being able to encourage your customers to buy from you. What do the other large retailers do that you don’t?
Once you get the answer to this question, you should be able to make a greater impact in the market.
If you own a brick and mortar store, then it is important that you understand your customers’ needs. More than lower prices, customers give importance to their experience inside your store. It can either be the way your staff treats them or the appearance of your store- or even both.
Companies like Amazon provide great convenience for customers as they have the freedom to get their products delivered straight to them. But you as a physical retailer have the chance to give your customers in-person service and provide immediate solutions. You can use this to your benefit and ensure that you have your customers coming back to you for the experience they have in your store.
Another important factor to keep in mind while doing business in a physical retail environment. The lack of competitive pricing can even drive your customers away.
Whatever your prices are, you should be aware of whether you are placed above or below your competitors. Understand where you can bring change to make a difference in your sales. Today’s consumers are aware of comparison tools and aggregators that they can use to find the best deals online.
Ensure that you look at all of your competitors and the prices at which they are selling their products. With the help of this, put a price on your product as well. It is best to keep the price gap small when compared to your competition. Extremely low prices can cause your customers to doubt the integrity of the product, and extremely high prices could drive them to your competitors.
Customers don’t only judge products based only on the price but also the credibility and the popularity of the brand. Even if you are providing low prices, ensure that your customers make a connection with your brand. Companies create a brand perception among consumers to help establish a halo around their product offerings.
After this, you can test the prices of your products. Put a label and see how the product sells. It is better to experiment with a product that everyone buys, instead of less popular ones.
Continually lowering prices can make your customers lose interest in buying your products altogether. This will also take interest away from your less popular products. A strategy like this can become redundant and even detrimental to your business.
Instead, you can keep constant prices for your top selling products. Utilize discounts, coupons, cash backs, and other attractive deals on your less popular products to give them more traction.
The key to sales is a deep insight on how the market works and what makes the customer buy any product. And the only way to do this is by doing as much market research as possible.
By Frida Cooper
and I have been working as a retail analytics researcher at Intelligence Node that helps retail companies with price optimization.
Member since September, 2017
View all the articles of Frida Cooper.