Convenience Store News

JAN 2017

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32 Convenience Store News | JANUARY 2017 | WWW.CSNEWS.COM SMALL OPERATOR The amount of money for which the supplier of a product recommends that it be sold in stores. This includes items that are pre-priced by the supplier. This price strategy takes away decision-making from the retailer and also promotes "sameness" in the market. Once you define the overall pricing strategies for your store, you need to define other guidelines for how you will establish prices, including: • Consider Your Target Shopper — You need to determine the most important items for your shopper and establish what they are willing to pay for each item. • Flexible Margin Strategies — If you have margin strategies, they shouldn't be the same across cate- gories, nor should they be the same for the brands and items within a category. • Profit Objectives by Category — You will need to establish profit objectives for each category (and then develop a plan of how to attain the gross margin dollars). • Develop Pricing Strategies by Category — This will help you achieve your category sales growth and profit goals. • Understand Price Elasticity for Your Categories and Key Items — This will help you respond most effectively when you need to respond to pricing changes. Because changes in price up or down T here are many influences that affect profitability and the bot- tom line for your convenience store. Pricing is a critical source of influence over shopper purchase behav- ior, and the pricing decisions you make directly affect category sales, inventory positions, and category profitability. A change of a few cents can profound- ly impact both sales and profit for your categories, and your stores. So, there's an opportunity to become more strategic in your pricing for your store, ultimately driving sales and profit. There are three important areas you need to con- sider in order to move to more strategic pricing: • Develop your pricing strategies and guidelines; • Set regular and new item pricing; and • Set promotional pricing. Each of these three components is important to understand for your c-store. Each will give you the foundations to make the right decisions for pricing in your convenience store. DEVELOP YOUR PRICING STRATEGIES & GUIDELINES Retail pricing strategies strongly influence who shops within your store. Some of the most common pricing strategies in convenience stores are: High/low pricing: This most common c-store strat- egy focuses on temporary price reductions as a means to advertise products and draw traffic to the store. Competition-oriented pricing: The retailer reviews competitive pricing in their market and sets their prices accordingly. Under this strategy, you may make competitive pricing decisions through price matching on known value items or KVIs. This allows you to price competitively within your market on the most important items for your shoppers. Or you can set pricing rules relative to your competition. This strat- egy allows you to price specific items within a certain percentage or dollars and cents vs. competitors. Manufacturer or supplier suggested retail price: Strategic Pricing Considerations for Your Store A change of a few cents can profoundly impact both sales and profit By Sue Nicholls, Category Management Knowledge Group

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