Roulston Retail Partner Dick Seesel on Retailers Overcoming the Challenge of Over-Promotion

August 17, 2012

In 2012 there have been numerous stories of retailers changing their pricing and promotion strategy to help drive sales. Two that come to mind are JC Penney’s returning to becoming more sale-oriented from their best price strategy along with Supervalu moving toward offering lower prices with less promotion by the end 2013. Both companies have fallen into a trap of training consumers to wait for deep promotional discounts before buying anything and need to change their ways. The first challenge is making sure you have the right price for the right product. Dick Seesel believes, “Both stores (JCP and Supervalu) have become victims of the “barbell effect,” in which they are outgunned by lower-priced competitors with better cost structures on the one hand, and stores with more pricing power due to higher-end assortments. In Supervalu’s case, think Walmart below and Whole Foods above. It’s not always about price and promotional activity…a lot of these stores’ issues are driven by content and the store experience.” The second challenge is to ensure that you have the right price for the brand image. This is a big deal for JCP because they’re stuck in the middle between Macy’s and Target and it is arguable if they have made a compelling case for why they should be considered by shoppers of either chain. Dick states, “JCP’s situation is more complex. In hindsight, they may have erred not by pursuing a new pricing policy, but by focusing on it before addressing content and store changes that will take years to unfold. As a result, they have chased some of their most loyal (and bargain-driven) customers to competitors. And they have not done a good job reinforcing the value message in-store: Would it kill JCP to sign its new Levi shops more aggressively with its new everyday prices for jeans?” To read the full article please visit http://www.retailwire.com/blog-post/e26cfc84-1a74-491a-a91e-7eb1280c3513/rsr-research-over-promoted.

Richard Seesel is the Manager and owner of Retailing In Focus, LLC. He was most recently a Senior Vice President and Divisional Merchandise Manager at Kohl’s Department Stores. Dick is proud to have helped Kohl’s grow from 18 stores to a national retail powerhouse, during an era of change and consolidation throughout the retail industry.

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