Big retailers get strategic with their product prices
For retail merchants, one of the core ingredients to success is offering products at competitive prices. While providing a satisfactory customer experience or appealing to a niche audience, modern consumers nowadays are even more conscious of cost. Thanks to the internet and mobile devices, it has also become easier to find the best prices for products and services.
The top retailers know the importance of offering competitive prices and are the most likely to experiment with different cost points, a new survey from Black Lotus suggests. According to the data, the top 20 most-visited retail websites change their prices approximately 30 times more often than smaller websites.
"The top retailers are being very strategic in how they approach pricing," says Rodrigo Carvahlo, the CEO and founder of BlackLocus. "They're using loss leaders to draw in customers, while increasing prices on other products to ensure that their margins are there."
If consumers are paying so much attention to the prices of products, it's crucial that retail merchants do the same. While it may not necessarily be the best idea to get in price wars – this is especially the case for smaller companies – it's worth the effort to know which products are selling and at what prices.
By knowing current market prices and inventory conditions, retailers can capitalize on their competitors' weaknesses. For example, if a product sells out somewhere, merchants could raise the prices on these products and profit on them. Conversely, they could consider lowering costs if they have an opportunity to do so without taking a loss.
"Pricing is increasingly important as consumers become more sophisticated about using the web to compare prices. A recent survey found that 38 percent of smartphone owners said that they used their smartphone to find the lowest price on an item during the holidays," Internet Retailer notes.
Keeping up with prices of competitors can be a challenge. Fortunately, there are technology solutions that can be used to monitor prices at other retail brands more efficiently.
While lower prices will certainly guarantee more sales, it's also important to remember that it doesn't translate into greater revenue. Several retailers recently revised their projections after deep holiday discounts affected their bottom lines.
