This is the sixth article in our series based on a research report JustEnough recently sponsored with Boston Retail Partners into the current state of the industry around Merchandise Planning which uncovered strategies that retailers can focus on to enable effective planning in today’s omni-channel world.
We will continue to look into the elements the survey found that retailers can focus on to enable effective planning in an omni-channel world. Please contact us, if you would like to learn more about how JustEnough solutions are helping leading retailers to successfully plan for their omni-channel operations.
Here is part six:
A holistic pricing strategy
Strategic pricing is critical to effectively meet customer demands and ensure they continue to shop your brand. Moving to an omni-channel environment makes pricing even more challenging as customers now have access to pricing from different channels.
The capability to strategically price goods throughout the season allows retailers to improve gross margins and profits. Currently, retailers formulate pricing strategies based mostly on seasonality, store clusters and promotional calendars. Unfortunately, this dated approach is often inflexible and forces retailers to systemically take markdowns on items that would continue to sell at a higher price in certain stores. For instance, while swimsuits may typically not sell at full price in cold weather stores in December, stores in New York may be able to sell them given their high traffic levels and number of international customers.
Traditional merchandise planning tools make it difficult, if not impossible, to execute a more nuanced pricing strategy. Also, older tools, lacking advanced analytics, might miss dynamic pricing opportunities and execute the same price at all stores in the same cluster.
Omni-channel planning tools allow retailers to take advantage of selling goods in the most profitable channel. While at first glance it may seem illogical to transfer goods from store to online fulfillment, an advanced planning tool will recognize at what price a transfer makes sense.
Finally, retailers should look to move towards dynamic pricing across channels to maximize margins. While this is still a distant dream for most retailers, a cross channel dynamic pricing model would allow retailers to recognize customers and offer them the price that they are willing to pay, and that is most profitable to the retailer. Some retailers are already utilizing such technology on the web, but this same idea could find its way into more brick and mortar retailers in the future.
Currently half of the respondents utilize the same prices across all locations and channels (Exhibit 12).
Exhibit 12: Pricing strategy
You can read the complete BRP 2015 Annual Merchandising Planning Report here.