Our recent posts discuss ways retailers can compete most effectively in the upcoming holiday season. Sales, promotions, and desperation before their time are extremely detrimental to retailers' bottom lines. Heavy discounting carries a price, the wrong price, particularly at the time of year when retailers typically earn much of their annual income. Not only are retailer margins slimmer, but discounts can devalue the merchandise. Retailers must utilize competitive pricing and assortment intelligence solutions available to view the true retail landscape -- and make the most intelligent pricing decisions in any season.
Here's Marketoonist Tom Fishburne's last-year's-version of what The 12 Days Of Christmas will look like to consumers again this year if retailers again buy into doom & gloom forecasts, and don't apply themselves to setting and getting their prices right:
Cartoon with permission of Tom Fishburne, Marketoonist
Don't let this be you. Media too often set the tone with disparaging comments like: "It's going to be another difficult season." And then retailers do it to themselves. Retailers get jumpy and competitive and start offering sales before even trying to get reasonable prices for their merchandise.
The only one who wins the game of "discount chicken" is the consumer, the one that retailers have trained to look for discounts. Sales can be a great way to boost sales and profits in the short term -- but sales carry great risks to long-term profitability if not used wisely -- so think carefully before raiding your own prices.
This Holiday Season, retailers might gift themselves with REALISTIC PRICES. In a tough retail environment, retailers may, understandably, have to discount to keep pace with competitors. But Fishburne suggests that being in that situation can also indicate a broader strategic marketing failure. If you're not unique enough in some way that makes you a category of one (think Nordstrom, Zappos, Apple), then you're always exposed to the risk of price competition. Even Target Stores and Neiman Marcus are pairing up this year to offer a collection of holiday fashion, home, and accessories that will be sold at both chains, giving them each a unique audience, and it will be harder for others to compete with this arrangement.
The astute use of pricing and assortment intelligence solutions lets retailers see what's happening in the marketplace, in general, and in relation to their competitors, in particular. Retailers can compare assortments with their competitions' to see what they have in common, what they each have that is unique, whether their competitor is out of stock, and be aware of how these factors affect their pricing power, all of which is happening more and more in real-time.
Armed with competitive information, retailers can make the most critical decisions about pricing, and leave no money on the table. These are the ways retailers can price right, avoid the lemming-march of discounting -- and make a profit -- in any season!