Friday, July 2, 2010

Pricing Inconsistencies

If you are old enough to remember the year 1979, you might recall the horrendous period of hyperinflation as prices were going up so fast, Americans were actually hoarding food. Many leading economist believe it will happen again, and soon. It means, in order to stay profitable, you may need to change your retail prices with every shipment of new inventory. How do we accomplish this in the current environment?

Pricing labels will mean nothing. Employees will make hundreds of errors trying to remember prices of different products and your customers will go away mad — some to never return to your stores. If you raise your prices too fast, you will get the reputation of a price-gouger – too slow and you may lose thousands of dollars. Hyperinflation may end the convenience store industry as we know it.

The curse of using price labels is they are almost always wrong. I know there's an argument that customers must know what the retail price of an item is, but using labels creates as much confusion and misunderstandings as it provides a service – cancelling each other out. Often, when we are scanning the inventory in a new store while installing our scanning service, we must go back and forth to find a clerk to give us a price on an item to enter into the system. The comical thing about this is if you asked three clerks what the price of an item is, you will most likely get three different answers. I have seen it start arguments between clerks.

In today's economy, not having control over you pricing is costing you a ton of money by setting up an environment where items are being sold below cost, or of items not being sold at all. Yesterday, a shopper asked me the price of a package of crackers. I found it disheartening that in the same company those crackers were selling for $0.39 in one store and $0.59 in another. Because there were no labels on the display, I gave the lady a price of $0.59. She waved her hand at me and stormed out of the store.

Having different prices in different stores is a good thing – if you are doing it for a particular reason. But you need a reason for doing it.

Electronic price labels can be obtained for as little as $3.50 per unique item. If your stores have 3,000 unique items on the shelf, it requires a one-time investment of $10,500 per store. Depending on your individual situation, this cost may be prohibitive. But, you should consider either using electronic price labels are posting the prices on a spot on the gondola, other than on the item itself. Of course, you have to have a way of updating the labels. We can update price labels via our wireless router automatically. As an alternative, you might consider doing away with price labels entirely. More and more stores appear to be leaving labels off and letting the POS price the item at the counter.

An electronic price book, networked to you POS devices over the Internet will solve these problems giving you the power to be sure you're making a profit on each and every sale. Without it, you won't know until the end of the month. In fact, you never not find out until it's too late.

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