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Make smart merchandising choices to avoid discounting

September 20, 2011 by Bob Phibbs — CEO, The Retail Doctor

Retailers are trying to keep up with the price-cutting frenzy of competitors, extreme couponers and daily deal sites.

Many feel they can only attract shoppers if it is a "deal," so that is how they are merchandising their stores.

Not necessarily smart...

For a certain time-constricted shopper, this may be an easier way to browse. Like this display at Starbucks I saw last year where all items were under $10.

But it may also limit profits as you are giving in to the mission shopper who has come in with a price in mind. Here's what I mean...

Every aspect of retail has the same issue: Customers don't know how much something costs.

When I was in the western wear business I'd hear, "I'd like to spend about $75 on a pair of boots." The average pair they strolled out with were about $150.

A window fashions retailer could hear, "Oh we have a usual window and I'd like to cover it for about $100." There is no "usual" size window and the ultimate cost can be much more.

In the hotel business we heard, "I just need a bed, not the extras – I'm just going to sleep there." If you want to sleep well, you pay more.

Think about the last time you priced a new car. Was your final decision strictly about price?

Unless you work in the sector of business you're considering, most prices for everything will carry a lower perceived price. That's why it's up to good displays that feature a range of prices, great salespeople and great products to help shoppers get what they want, not necessarily the price they say they can afford.

And merchandising your store based on price or discounts can leave money on the table.

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