Retail Pricing

Today is the last day of the 2004-05 Australian financial year and the height of the retail sales season. How timely then that Business Review Weekly is running a story on discounting in the retail sector.
The second paragraph of Craig Roberts article ("Lights on the Till") contains a great quote about the power of pricing:

"Many of the retailers that are struggling the most have slashed prices in an attempt to recover, but in doing so they risk falling further into the mire. Companies that have refused to drop prices, but continue to provided differentiated service or quality to consumers, appear to be doing better".

So what are the "better companies" doing?

- They are exceeding their customers expectations when it comes to quality of service (many companies don't realise they are providing a product and a service);
- They are providing a higher quality product or products;
- They have a better store layout or format (next time you walk into a store with a carpeted or parquetry floor, think of the effect it has on your reference price, compared to a store with a polished concrete floor);
- And finally, they have the right products and control over their inventory.

Several of these topics (and much, much more) are discussed in Paco Underhills' book "Why We Buy: The Science of Shopping", a recommended read for anyone in the retail business.