Big retailers like the supermarkets, K-Mart, Target, Big W and similar pitch price because they are challenged differentiating on anything else.
I think pitching on price is a mugs game as the only way to bring a shopper attracted by price back is on price. This is especially true in smaller basket businesses such as newsagencies – the basket depth in our stores is considerably lower than a supermarket or department store.
It is the shallower basket that makes price a more important consideration for us.
We in small business are challenged on price as we cannot buy in the volume of a Big W or the like.
We recently encountered a challenging situation in my newsagency with the Bunch-O-Balloons product. Our $14.99 price was fair given our purchase price. Woolworths had it at $10.00. The decision for us was – do we match it or have customers say we are expensive.
Since shoppers think newsagencies are expensive we held our ground on the price.
What is interesting is that we sold more in the week of the Woolworths catalogue pitching the product at $10 than in the two months prior for which we had the product. The Woolworths ad helped drive our sales without a doubt.
I suspect our sales would have been the same had we dropped the price to $10.00. The only difference would be that we made less per sale.
Maintaining our position on price for the Bunch-O-Balloons product helped us maximise our return, meet shopper expectations on price and reinforce the relevance of our business by having stock that is being actively promoted.
My point here for newsagents is – you do not have to match a major competitor on price. If you do decide to match them you are building an expectation that you are more like them. You are more likely to attract price fickle shoppers.
Thinking about this issue more broadly, being aware of what the majors are promoting on TV and in catalogues provides us with opportunities to do as happened for us with the Bunch-O-Balloons product. Have the named product in store and ride off the coat tails of the major competitor. That your price is higher does not matter. What matters is that you have the product they recognise from your competitor’s advertising.