On the cusp of the 1990’s, Randall’s Department stores encountered a quandary surrounding their pricing strategies: Should they continue to pursue Every Day Low Pricing strategies coupled with frequent promotions or determine a narrow focus on one or the other? If this is preferable, then which one will reap the biggest benefits for the department store? Competitors were aggressively promoted their established brand promotions with more fervor than ever, and Randall’s was slipping in market dominance. A decision had to be made regarding their pricing policy henceforth.
Sales data shows that Every Day Low Pricing was not a preferable strategy. Armed with this knowledge, Randall’s must execute a strategy of changing prices so that there is no confusion with the consumer as to what they can provide: Quality products at consistently low prices. With the elimination of erratic and deeply discounted promotions, Randall’s can begin a new era of consistent sales cycles and profitable returns in a marketing environment which is receptive to this development.
#1 – There are several distinct advantages to having a more stable and single-level pricing structure. A commitment to this would mean a significant decline in store promotions, but it can be argued that the benefits outweigh the detriments. First, the money that could be saved on largely eliminating sales events accumulates to become a substantial savings pot for the company per year. Secondly, staff members would not be so taxed. Process adjustments borne by the need to honor their guarantee of matching a competitor’s price or paying back the difference if they were to reduce their own requires extra staff that is unnecessary under a stable pricing structure. Another benefit of this strategy is a better inventory turnover ratio. Daily sales can be better predicted and more consistent when the prices to not fluctuate constantly. The cost of residual merchandise to be sold in clearance events at...
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