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

Textiles | On 24th Jul 2017

Govt extends deadline for GST composition scheme to Aug 16

The Government on India has extended the deadline for small...

L-R: Dhanapal, JMD, Best Corporation; Prabhu Damodaran, Convenor, ITF; Narayanasamy, MD, Micro Cotspin; Senthilnathan, MD Rasitex India; and Sabapathy, MD, Prasanna Spinning Mills

Textiles | On 24th Jul 2017

TN mills seek partnership with cotton growing states

Spinning mills in Tamil Nadu are seeking stronger partnership with...

Textiles | On 24th Jul 2017

Irani terms GST as a ‘great step towards transparency’

Union textiles minister Smriti Irani has termed the Goods and...

Interviews View All

Jim Desai
Blaiva Fabricaa

Fashion industry likely to remain labour-intensive in coming years

Sunil Kumar Sharma
Loknayak JPNSSSG Ltd

'The blend of cotton–linen yarn has high demand in the domestic and...

Mohammad Mamun Ar Rashid
UL VS Bangladesh Ltd

Productivity, creativity and innovation play a vital role in the growth of ...

Eamonn Tighe
Nature Works LLC

Eamonn Tighe, Fibres and Nonwovens - Business Development Manager of...

Marten Alkhagen
Swerea IVF AB

Marten Alkhagen, Senior Scientist - Nonwoven and Technical Textiles of...

Giorgio Mantovani
Corman S.p.A

Giorgio Mantovani, MD of Corman, with a presence in both Milano and New...

Tony Ward
Tony Ward

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

Sonam & Paras Modi
SVA

Sonam and Paras Modi's Sva Couture is synonymous with head-turning...

Wendell Rodricks
Wendell Rodricks

"We should not compare India and the West. There are things we do that...

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

July 2017

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

news category


Related Categories:

Planning to Take the Leap towards
Sustainability?

Do you see sustainability as a route to business growth?

Yes No

Do you think the sustainability space has the needed tools and resources available for a business to lead change?

Yes No

Do you think adopting a sustainable approach will be a profitable move for your business?

Yes No

Do you want the world to know about your sustainability journey and your business’ environmental footprint?

Yes No

Thanks for your valuable feedback. Claim your free latest sustainability e-book.


E-News Insight
Subscribe Today and Get the
Latest News Update in Your Mail Box.
Advanced Search



X