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

OECD urges UK for close EU ties to meet Brexit challenges

Textiles | On 24th Oct 2017

OECD urges UK for close EU ties to meet Brexit challenges

The British economy has weakened following the decision to leave the...

Gujarat govt announces bonus for cotton farmers

Textiles | On 24th Oct 2017

Gujarat govt announces bonus for cotton farmers

The Gujarat government has announced a bonus of Rs 100 per 20 kg for...

Courtesy: Karl Mayer

Textiles | On 24th Oct 2017

Karl Mayer upgrades Webshop Spare Parts platform

Karl Mayer, a technology and market leader as well as driving force...

Interviews View All

Anavila Misra
Anavila Collection

Fashion shows are also encouraging and highlighting sustainable fashion

Janak Dhamanwala & Sunil Dhamanwala
Jansun

Moving towards sustainability is also a social change

Claudia Kersten
Global Organic Textile Standard

‘GOTS is a very efficient supply chain management tool, especially for...

Hardik Sanghvi

Idealin Fogging Systems has been engaged in designing and manufacturing...

Liz Manning

<div><b>Liz Manning</b>, Business Development Manager at Catexel, has...

Ravindra Jain, Ashish Baid

Oswal Prints Private Limited has been manufacturing and exporting ethnic...

Larry L Kinn
Suominen Corporation

Larry L Kinn, Senior Vice President - Operations Americas of Suominen...

Johan Berlin
InvestKonsult Sweden AB

Investkonsult Sweden AB has been buying and selling second-hand textile...

Giorgio Mantovani
Corman S.p.A

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

Nisha Chanda
Whistling Woods International School of Fashion

<div>A lack of upgraded courses in costume designing and fashion as per...

Prathyusha Garimella
Prathyusha Garimella

Hyderabad-based designer <b>Prathyusha Garimella</b> is known for blending ...

Divvya and Nidhhi Gambhir
Walnut

<b>Divvya and Nidhhi Gambhir</b> started their career with the launch of...

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

October 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

Active Poll

Do you see sustainability as a route to business growth?

Yes
76.1%
No
12.7%
Skip
11.3%

Total Votes: 71

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

Yes No

Active Poll

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

Yes
62.0%
No
28.2%
Skip
9.9%

Total Votes: 71

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

Yes No

Active Poll

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

Yes
85.9%
No
9.9%
Skip
4.2%

Total Votes: 71

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

Active Poll

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

Yes
76.1%
No
11.3%
Skip
12.7%

Total Votes: 71


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