What do retail leaders know about store promotions that you don’t? In a new report released last month, Retail Systems Research (RSR) uncovered common practices from retailers winning the war on store promotions and contrasted it with organisations struggling to get it right. While the research focused on pricing strategies, it would be hard to read the report and not see the obvious contribution a sound promotion and ticketing strategy makes to a successful operation.
Tough Love: An In Depth Look at Retail Pricing Practices provides fascinating insight into the escalation of the number of pricing changes in retail stores. The results were compiled from more than 100 retailers around the world making the results relevant to the global market. A key goal of the study was to identify what made a retail “winner” and what kept an organisation achieving below average growth rates. The findings revealed that retail winners aren’t better; they’re different. Those differences occur in three ways:
- Retail winners think differently.
- Retail winners plan differently.
- Retail winner respond differently.
Volume of price changes escalating
The past three years have seen a rapid increase in the number of price changes across the retail industry. A dramatic 90% of those performing below average – the laggards – have experienced regular price changes. Even retail winners manage constant price changes with 72% reporting an increase in volume. This surge in pricing activity adds a considerable operational burden to a store network especially if a ticketing strategy is not in place.
The promotions conundrum
Interestingly, the place where retailers feel the most confident about promotions is in responding to competitor price changes rather than customer behaviour. While 50% of leading retailers feel like they can respond quickly to competitive pricing, the continually changing behaviour of shoppers is probably going to erode that confidence. Promotions need to be managed across distributed and increasingly fragmented channels. The conclusion reached by RSR is clear.
“There is absolutely no way a retailer can say they are doing promotions well if they can’t coordinate promotions across multiple organizations or channels, and especially if they have no way to measure the impact of promotion decisions.”
As consumers come to expect consistency across all channels and often use mobile devices to compare prices while shopping in stores, the pressure has never been greater on retailers to meet customer expectations on pricing. Retailers who think differently about how to manage promotions are going to come out ahead.
Organisational challenges attributed to ticketing
Many of the organisational challenges revolving around pricing lead back to inefficiencies in a promotion and ticketing strategy. Retailers reported the following difficulties:
- 35% – Making sure each store changes prices in an accurately and timely manner
- 24% – Coordinating with marketing on promotions and offers
- 20% – Inability to effectively manage all pricing rules and/or understand the impact of rule violations
- 17% – Keeping up with pricing changes by manufacturers
- 15% – Keeping up with promotional deals between buyers and manufacturers
One of the major conclusions in the report states, “. . . retailers don’t fully understand how much they damage their customers’ trust when pricing conflicts are not handled smoothly.” Having conflict between your stores, within your franchise, and in your online channels presents significant opportunities to erode the trust established with your customers. Putting together a comprehensive ticketing strategy spearheaded by the marketing department is the first step to successful promotional planning.
Measuring the cost of price changes
Changing prices across an organisation is a costly exercise but, according to RSR, retailers don’t often measure the full impact. Do you know how much a price change costs your organisation? Have you considered the cost of labour, supplies, compliance and the lost sales opportunities when sales associates are creating signs instead of selling? Successful retailers understand the organisational cost of a single price change and can measure the true cost of ticketing throughout their retail network.
What this means for retailers
The message to the retail industry is clear. Adopting a strategic approach to promotions and ticketing and putting marketing in charge increases consumer trust, reduces costs and improves operational efficiencies. It’s unlikely the escalation of pricing changes is going to wane any time soon. To improve profit margins, retailers must begin to think more strategically about promotions, empower their marketing departments and measure the true cost of ticketing.
If you’re struggling with continuous pricing changes or would like to find out how you can plan and track your promotions, fill out our contact form and we’ll get in touch with you. We help over 6,000 stores manage their promotional signs and ticketing every day.
Do you know the real cost of a price change?
This post originally appeared on the SignIQ blog and is used with permission.