Home / Knowledge / News / Information Technology / Price optimization strategies to help retailers maximize sales
Price optimization strategies to help retailers maximize sales
26
Aug '10
The retail landscape has changed dramatically. Multiple selling channels, constrained consumer spending, abbreviated product lifecycles and offshore sourcing all contribute to an increasingly more challenging retail environment.

Retailers must tie their pricing strategies all the way back into demand plans to ensure that inventory is readily available at the desired location and price point. While retailers discount slow-turning products to allow for sales of high-margin items as a way to improve margin performance, many companies still struggle with how and when to mark down a product.

"Retail is becoming much more competitive today, as price sensitivity continues to erode consumer loyalty," said Jane Fazzalari, vice president, retail industry strategy, JDA Software Group, Inc.

“The challenge of meeting margin goals while offering prices appealing to consumers has made time-phased markdown decisions a critical component of the product lifecycle strategy. It can cost a company dearly if done incorrectly. Therefore, more than ever, retailers need an optimal pricing strategy to achieve their business objectives.”

JDA Software Group, Inc., The Supply Chain Company, offers the following effective merchandising and pricing recommendations to help retailers maximize sales:

Deliver localized assortments. In an ideal world, retailers score big sales by selling products at full price and avoiding hefty markdowns. In reality, seasonality, uneven selling cycles and fluctuations in consumer demand can all have a negative impact on sales, causing inventory stagnation or missed revenue. Markdowns are therefore inevitable.

However, a truly consumer-driven retail business can minimize markdowns by recognizing its products' attributes and the shopping habits of its customers – demographics, geographical conditions, calendar holidays, etc. – so that the right product is delivered to the right store and sold at the right price. A localized assortment strategy that is tied to a retailer's demand plans is one of the most effective ways to improve profit margins without slashing prices.

Retailers make accurate forecasting and merchandising decisions that match specific consumer demand. When possible, retailers that implement a localized assortment strategy should also match their pricing and promotions to assortment lists at the store or store-group level.

Have a comprehensive view of demand. When assortments and product promotions fail to move inventory, markdown clearance becomes the last resort. Aged inventory in the store must be liquidated to make room for new inventory. In addition, today's economic uncertainty has turned many consumers into discount shoppers. Therefore, markdowns can drive traffic into the store and ultimately help products sell faster.

But how do retailers determine the optimal markdown price and still manage to meet margin goals? They must assess the true margin impact of each product, tailor markdown plans by store/location, factor in the price sensitivity of their customer base and understand the opportunity costs.


Must ReadView All

Courtesy: European Commission/European Union

Textiles | On 26th May 2018

EU set to negotiate FTAs with Australia & New Zealand

The European Union is all set to begin negotiations for free trade...

US bans import of cotton goods from Turkmenistan

Textiles | On 26th May 2018

US bans import of cotton goods from Turkmenistan

The US Customs and Border Protection (CBP) has issued a Withhold...

FPCCI prepares report on Pakistan's export issues

Textiles | On 26th May 2018

FPCCI prepares report on Pakistan's export issues

Federation of Pakistan Chambers of Commerce and Industry (FPCCI)’s...

Interviews View All

Mukesh Agarwal & Rajesh Agarwal
Madhuram Fincap Pvt Ltd

Increasing prices and lack of demand main issues facing industry

Jurgen Gauger
Spreadshirt

‘Buying crowdsourced or creative designs are much more appealing to the...

Headhonchos
Indian fashion industry

Organic the first choice of any environment-conscious person

Urmil Arya

Sushila International, a well established textile organisation established ...

Harmeet Singh

New Delhi-based Jogindra Industries Private Limited provides an assortment ...

Suresh P Bagrecha

Komal Texfab, founded in 1981, is into manufacturing of knitted fabrics,...

Iago Castro Asensio
RCfil Distribuciones S.L.

Iago Castro Asensio, International Business Manager of RCfil...

Kai Poehler
Voith Paper GmbH & Co. KG

The glass mat industry is growing by five to eight per cent annually. Kai...

Lynda Kelly
Suominen Corporation

Suominen Corporation is a manufacturer of nonwovens as roll goods for...

Pranav Mishra
Huemn

Designers Pranav Mishra and Shyma Shetty’s Huemn is known for its...

Samar Firdos
Arvind Ltd

<b>Samar Firdos</b>, Chief Manager (Design) at Lifestyle Apparel Denim...

Tony Ward
Tony Ward

"You have to truly understand what your client wants, know her needs, what ...

Press Release

Press Release

Letter to Editor

Letter to Editor

RSS Feed

RSS Feed

Submit your press release on


editorial@fibre2fashion.com

Letter To Editor






(Max. 8000 char.)

Search Companies





SEARCH

Leave your Comments


May 2018

Subscribe today and get the latest update on Textiles, Fashion, Apparel and so on.

news category


Related Categories:

Advanced Search