Does Your Business Have a Retail Pricing Problem?

Author: Ryan Kinzy

Today’s blog comes from guest contributor Ryan Kinzy, managing partner of DoubleBlaze Consulting. DoubleBlaze is a JDA partner working with retailers to improve their lifecycle pricing processes and helping them realize increased profits. A longer version of this article originally appeared on the firm’s blog.

When we engage with retail prospects for our consulting services, the first thing I usually ask is, “Are you setting prices in a spreadsheet?”

If the answer is “yes,” you were likely experiencing challenges with your ERP or Host Merchandising system that were insurmountable and that led you to externalize price-setting. Often, it is not just a single spreadsheet, but many spreadsheets that must work in unison to deliver prices.

If you suspect you might have pricing problems, how do you find out? We typically start analyzing where errors are the most obvious. For retail, you can typically start with store operations:

  • Track how many wrong prices are reported per week and which stores have errors
  • Take a sample of orders and re-price them. A random sample will indicate if there are pricing errors
  • Quantify the financial impact of the errors:
    • If a product is overpriced, you risk losing a sale. You can also undermine customer satisfaction, but that is tougher to quantify.
    • An underpriced product will impact profit, and this is easily calculated. Also, identifying pricing errors takes time and effort that has a cost, in that an employee must analyze the error, correct it and move it through the systems to eCommerce or the POS.

Analyzing this process and mapping it to fashion customers, we’ve seen a multi-step process that identifies several potential points of failure.

What Can Go Wrong?

Where can your process go wrong? To answer that question, it’s best to do a thorough review of the process at your business. We look at each step, interview the people doing the task and map out the steps and tools. For apparel and fashion, here are typical areas of opportunity:

When a product is introduced, the merchant typically defines price points to target and then a

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