Increase Your Margins While Staying Competitive

How can you expand margins, while staying competitive? It’s not easy, but it is possible.

Pricing is such a huge issue for any business owners and retailers. How come customers can walk into a multi-national chain store and not even question their pricing? We can’t necessarily compete with the pricing that many multi-nationals can offer, but there are things we can do to help our perception in the public eye.

Try and gather your team together to have a discussion about what products in your store you and your team feel are very price sensitive. Now you have to really spend the time to boil down this list to as few as possible. They should be products that customers can easily compare apples to apples with those products carried by your competitor. In other words, they are the products where if you are priced even 10% or 20% higher than your competition, your customers will notice and you will be perceived as being expensive overall.

You’ll be surprised, most often there is only a very small handful of SKU’s that fit this category. At Green Village Home & Garden, we only have about 18 items on this list.

Now that you’ve identified these price sensitive items, we bite the bullet and insist on having the best price in town on those products, regardless of the cost. We also advertise it loudly through large signage so that all our customers know about our great deals. The displays are huge, well signed and out in the open for all to see.

With our price sensitive products displayed front and centre, it makes our other products and our store’s pricing seem much more reasonable. That allows us to then work at raising our margins in other product lines and categories throughout the store.

Your end goal should be to create a positive customer perception regarding your prices by targeting specific products, while raising your overall margins through other product lines where they aren’t so price sensitive. With the right strategy, you can in fact raise overall margins, while keeping a good reputation for being reasonably priced in the market place.

Like I said, it’s not easy, but it is possible. I’d love to hear your strategies and what worked and didn’t work for you. Share your thoughts and we’ll all improve as a result.