Don’t Let Your Competitors Determine YOUR Profitability!

In today's disruptive "retail (r)evolution", retailers have to fight on many fronts simultaneously in search of The Holy Grail of success and profitability. Multiple challenges pulling on everyone include competition, customers, manufacturing, supply chain, globalism, omnichannel, assortment, pricing right, data analytics, etc.  So, today's question is whether price matching turned out to be a worthy use of retailers' energy and resources?  Remember Walmart, ToysRUs, & Best Buy's attempts to price match, which led to quibbles over ad definitions, inconsistent application from store to store, differing interpretations of the word "local"; confusion at cash registers, mistakes in matching correctly -- and more -- creating bad customer experiences, as well as retailer pockets that got emptied quicker for those who couldn't (or shouldn't) compete with deep-pocketed retailers.

Nevertheless, everyone agrees that the shopper remains the most important part of the equation:

Shoppers want to know that the retailer is treating them fairly and consistently.

On the other hand, retailers have to educate customers and break them of the habit of EXPECTING price competition. In "The Case Against Price Matching", pricing expert Scott Francis says: "Each time a customer is rewarded for searching for lower prices ... the incentive to do it again increases... And you're ignoring all the other reasons for customers to do business with you." 

So what to do?

In order to make the greatest profit, the retailer has to sell the most products at the right price under any circumstances. Retailers have to position themselves that they are offering the best (not the lowest) price, the best policies and customer service, and that the goal for each and every customer is to provide simple, clear, hassle-free customer transactions.  And then do it!  

Using the science of predictive analytics and price optimization, retailers must utilize the sophisticated technology that makes the matching possible as well as gives them figures and decision-making opportunities that allow them to sell the greatest number of products for the greatest overall profit.

"The ideal retailer will have a strong pricing analytics program enabling active management of pricing on key items, combined with a strong non-price value proposition so that you can attract and retain customers without racing to the bottom on every item." (12 Ways Price Matching Can Hurt Retailers).

So what is the message to retailers?

*** Stick to your pricing strategy.

Customers are often willing to pay more for quality and value. (Think Whole Foods, Trader Joe's, fashion clothing and accessories, unique concepts, and much more).

***Keep your eye on your competition and on the market.  

Having good intelligence about competitors and pricing products competitively is the key. You've got to know what your competitors are charging and what the market will bear, but you don't have to match prices!

Bottom Line For Your Bottom Line

We've reached another rung in the "retail (r)evolution" when we recognize that price matching is pretty much a losing battle for those who seek to match somebody's else's low price.  

Retailers must use sophisticated retail pricing intelligence and assortment matching technology on a real-time basis to know specifically what is happening with their competition on a specific product at a specific time, as well as manage their own assortments efficiently and effectively.

Most important of all:

Be true to yourself -- and don't let your competitor(s) determine YOUR profitability!   

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Further reading: 

7 Stores With Price Match Guarantees.  Moneycrashers.

10 Reasons Price Matching is a Risky Strategy. Upstream Commerce.

 

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Naomi K. Shapiro

About Author

A seasoned market communications specialist, Naomi headed public information for several academic and professional associations and was the founder and CEO of award-winning agency, Creative Brilliance Strategic Marketing Communications. She created and published Brilliant Ideas for Publishers Magazine and authored popular newspaper trade reference, The Brilliant Book of Promotions, Sales Tools & Special Events. Simultaneously, Naomi savored the world as an adventure travel writer that included trekking on glaciers, fishing with saltwater crocodiles and swimming with piranhas. Naomi holds her M.A. from the University of Wisconsin, including participation in a unique industry-science-technical writing program.
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