Don’t believe the myth that a low price is the only thing that motivates shoppers to buy product in your stores. The reality is that consumers want quality products that deliver exceptional value. Natural health-focused shoppers know the true value of the products they buy.
Let me explain. Have you ever received a good deal on something you didn’t like? We all have. The difference is that the core natural shopper knows the difference between quality ingredients and highly processed ingredients that do not deliver the nutritional value their bodies need and want. This is where you come in, and this is where you have a distinct competitive advantage in your market.
An effective pricing strategy can set you apart from other retailers, and it can be the difference between being perceived as a follower or as a market leader. The wrong strategy can strip margin and make it difficult for retailers to survive. It can even push consumers away, encouraging them to shop the competition.
Any brand with deep pockets can “buy” sales velocity but those brands contribute little if anything to sustainable category growth.
Shoppers have literally unlimited choices when it comes to where they spend their hard-earned money. They want quality products at a fair price. Delivering on this is how you convert occasional shoppers into evangelistic loyal customers. Retailers should partner with leading brands to maximize shopper engagement.
To achieve this goal, the top-selling items in each category should be priced equal to or close to the competition. This allows consumers to compare your prices against other stores, giving them the perception that your prices are good. This, combined with a strong brand strategy, empowers you to compete more effectively against other retailers.
Other items can then be priced differently based on complementary tactics and strategies. Retailers can use this strategy to make up for margin lost on items that are more aggressively priced, including “loss leaders.”
For example, an effective pricing strategy in the diaper category is one that drives shopper foot traffic to the diaper category. Economy diapers should be aggressively priced equal to other retailers in the market—by brand. Economy diapers should be promoted more aggressively. Premium and super premium diapers should be priced higher based on the additional benefits they provide. Adjacent/complementary categories could then be priced slightly higher to make up for the extra margin.
This strategy is effective because it encourages new parents to shop the entire baby care department to fill their child-care needs. Busy parents don’t have time to shop multiple stores to pick up all of the items on their shopping list. As a result, they will typically try to make all their purchases in a single trip, preferably atyourstore.
You can use this strategy across other categories within your store to gain the greatest benefit. Giving up the margin on a couple items will give you a larger market basket, more loyal shoppers, and happy, satisfied customers.
Note: The views and opinions expressed here are those of the author(s) and contributor(s) and do not necessarily reflect those of the publisher and editors of WholeFoods Magazine.
