If you work for a retailer, you know that a clear pricing strategy is vital for the everyday running of your store. But do you know just how deeply this strategy impacts your overall performance? Pricing is about more than profit or margins – it also alters perception and loyalty, making or breaking your reputation as a must-visit beauty mecca.
We’re breaking down four crucial reasons you need to develop a clear pricing strategy, plus how these details give you competitive advantage in the beauty industry. Here’s what you need to know…
1. Pricing Can Alter Customer Perception
Price plays a key role in how your stores are perceived by customers. Depending on the brands you stock and the promotions you run, your retailer could be seen as a premium, mid-range or budget choice. Make sure the prices you place on your portfolio reflect your identity. You should also consider what your choice in brand partners says about your overall beauty offering.
For example, if you stock a high volume of luxury brands and charge a premium, your consumers will believe your store offers less value for money compared to competitors. You will need to work hard on a brand perception strategy to turn that reputation around. Look to John Lewis for inspiration, where a prestige portfolio is balanced by their famous ‘never knowingly undersold’ promise.
2. The Right Price Will Maximise Sales and Loyalty
Beauty consumers are prepared to shop around for the best deals. With a growing list of retailers at their fingertips, they’ve become savvy shoppers who know where the best offers are found. With this in mind, you need to price competitively compared to your nearest rivals. The goal is to build a reputation as a good-value-for-money stockist, which will maximise sales and loyalty. Keep it consistent, and you’ll become a go-to destination for beauty shoppers.
3. Your Strategy Can Help You Competitive Advantage
Speaking of competitors; it’s vital that you keep an eye on how rival stores are pricing similar SKUs. Are they sticking to RRPs or dropping the price by a few sales-boosting pounds? There are a number of factors to consider when reviewing the costs at competitor stores. Look out for regular use of discount codes, product bundling and stocking of travel and/or industrial-sized products.
All of these details can impact value perception without altering a product’s list price. Even something as simple as next day delivery may be a deal-maker for consumers. (Just look at Amazon Prime.) By taking every facet of competitors’ pricing strategies into account, you can refine your own to ensure you’re gaining an edge over rival retailers.
4. Planning Promotions Correctly Can Boost Performance
You can’t talk about pricing strategies without mentioning promotions. From gifts with purchase (GWPs) to multi-buy deals, there are all manners of ways you can entice customers to your store. Just ensure that, when you’re running these offers, you get the word out to beauty consumers. This could mean running paid social ads, posting organically on Instagram and publishing newsletters.
Consider building always-on promotions into your email marketing flows, too. For example, you could offer 10% off a first order to everyone who joins your mailing list. This simple incentive helps you build a bigger email audience, which you can then retarget with new products and future promotions.
It’s also important to keep competitor research in mind when discussing promotions with suppliers. This is especially true if a beauty brand wants you to put their new or best-selling product on promotion. Check to see how other retailers have treated the same SKU. If it’s already on offer elsewhere or has been recently, your promotion may not have the same impact.
To find out more about how MMI’s data can help you as a retailer, get in touch at email@example.com
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