The bottom line is, you want to make a profit with your business. This means selling products and services that customers want and are willing to pay for at the price you are selling. Finding that point can be confusing to many business owners: balancing margins and finding out the going market price are things to consider before releasing a new product. The wrong strategy could lead to large financial losses; we have created a pricing guide to help retailers get to the other side and find the right pricing strategy for your business.
This is the most straightforward way to determine sell prices. This method is not related to market pricing and sets prices based only on actual costs. In this case, retailers estimate all fixed (e.g. purchase cost) and a share of variable costs (e.g. overhead costs that you have to pay even without any sales such as rent, payroll or utilities) to determine the sell price of a product. This method is most commonly used in product categories that are highly competitive where market prices are relatively known. Staple products or commodities are common examples.
Instead of adding the actual overhead cost of the business, cost-plus pricing is a lot easier to calculate as it assumes a specific fixed markup percentage to a product’s purchase cost. For example, some merchants will simply multiply the cost to buy a product by a factor of 2x to 3x. This is called the price markup. While this method is much easier to use, it is important for retailers to make sure that the markup percentage is enough to meet your target rate of return (profit) and to periodically review the markup to make sure that it is still suitable.
Value or market-based pricing
This is the most common method in industries where the perceived value of a product is highly driven by emotion or lack of availability such as fashion, art, luxury cars or concessions at sporting events. Essentially, this method sets prices mainly based on the perceived or estimated value of a product or service to the customer rather than according to the cost of the product or historical prices. This is commonly used by retailers with deep understanding of brand building, market pricing, managing exclusivity and valuing the benefit to a customer versus how much she or he is willing to pay.
While market-based pricing is constantly changing, and therefore more sophisticated to manage, with newer technology, it is increasingly possible for retailers to incorporate value-based pricing into their pricing strategy to avoid “leaving money on the table.” It’s also worth pointing out that the increasing number of merchants going online has also made pricing in some categories more transparent which increases price competition and can drive pricing lower. It’s why many premium brands enforce MSRP on their online retailers (e.g. Apple) and more merchants are selling their own branded products online today as these categories are the most likely to be successful since supply can be more easily controlled and substitutes are less available.
Introducing new products into the market by lowering price is a strategy that some retailers use to introduce their products into a saturated market. This is a good chance to build brand loyalty and to get new customers to try your products.
Although it may seem intuitive to jump into the market with this strategy to gather as many customers as possible, this strategy does have some drawbacks. Raising prices (after the initial release) often leads to some reluctance from customers, so proceed with caution.
Sensitivity to price changes
All of the pricing methods above should not be applied without considering whether a product is price elastic or inelastic. Price elasticity refers to how sensitive price changes will have on the demand for a product. For some products, demand will change significantly if prices are changed and vice versa. A classic example is grocery store bread. Unless brand loyalty is strong or there is a special product feature, bread pricing tends to be elastic: as price increases, the demand will decline.
Price elasticity is useful as it gives you a sense of how much you can adjust pricing without significantly affecting the demand for your product. It’s important to remember that many products have category thresholds. This means that even if you sell an product that is price inelastic or not sensitive to price changes (e.g. luxury purses), the market will have a perception of the maximum a buyer is willing to pay.
Similarly, it is important to remember that demand sensitivity is also impacted by the availability of substitutes or competitors. So if you sell in a category that has a lot of competitors with similar alternative products, the demand for your products will most likely be more sensitive to price changes since it’s easier for your buyers to find replacements.
Want to read more on how to manage inventory effectively?
For Asian Heritage Month, we wanted to highlight one of our favorite clients: Kam Wai. They are an Asian-owned frozen dimsum wholesaler and deli business based in Vancouver.
Papa Liu first opened Kam Wai’s doors in 1990 in the heart of Chinatown (downtown Eastside of Vancouver) because of the demand for good quality dimsum in BC’s growing Asian population. At present, Kam Wai is now one of the largest dimsum wholesaler businesses in British Columbia and supplies frozen dimsum to major retailers such as T&T Supermarket.
“Cantonese food is meant to be shared.”
Despite their growing business, Kam Wai keeps their pricing modest because they want to keep their dimsum affordable for their community. TAKU Retail helped make their menu more accessible by offering multi-language options so that non-native English speakers were able to understand the menu and itemized receipts.
Since renovating and implementing TAKU Retail, Kam Wai has almost doubled their daily sales. Director of Marketing of Kam Wai, Nick Sommer says that TAKU Retail’s inventory management made it easy for them to track and analyze daily sales. For Kam Wai, this means being able to keep tabs on what is selling well and to keep offering their dimsum at affordable prices.
“Yummy in the tummy, faster than fast food”
Kam Wai customers post positive reviews across different social media platforms. This is partially because of the easy and quick checkout process. TAKU Retail’s line-busting features help Kam Wai staff handle a high volume of orders efficiently in their busy store.
With most businesses back on their feet and not just relying on online sales to keep them afloat, retailers can start thinking of ways to drive foot traffic back to their stores.
Having said that, traditional methods of driving foot traffic may not be as effective as before. With safety and cleanliness being the main concern of most shoppers, experience-based strategies such as in-store events and classes are no longer practical as they once were pre-pandemic.
That’s why we’ve put together 5 strategies to help store owners drive foot traffic in a post-COVID-19 retail environment. Check them out below.
1. Focus on Health & Safety
Shoppers don’t want to feel at risk of contracting COVID-19 when they enter your store. So if you want more customers to shop at your physical store, you need to make them feel like it is safe to do so.
You can build trust with shoppers by visibly cleaning and sanitizing your shop, providing staff (and if possible customers) with masks, and placing hand sanitizer throughout the store. It is also a good idea to limit the amount of shoppers allowed inside at a given time. Consider placing social distancing markers or decals on the floor. This will help ensure that customers are following social distancing guidelines once they enter your store.
For more information on how to implement health & safety measures post-COVID-19, download our checklist here. Depending on the demographics (e.g. a lot of your customers are seniors) in your area and the space available in your store for people to socially-distance themselves while shopping, you may want to consider a mandatory mask policy. These can be controversial and must be implemented and managed carefully to minimize potential friction. Learn more about how to manage and implement mask policies in your store.
Don’t forget to take advantage of digital channels (social media, SMS, email) to communicate with shoppers. This way, customers will be aware of the health and safety measures you have in place and will be more comfortable coming to your store.
Remember – generating store foot traffic during the pandemic is not just about being the trendiest, cheapest, or most unique brand, it is about appearing safe.
2. Double-down on Google
Hundreds of millions of shoppers use Google everyday to start their product searches, making it the ideal place to list your merchandise.
Merchants in the U.S. can now access this feature for free while an international rollout is expected by the end of the year.
TAKU Retail POS has partnered with Google to make it easier for retailers to automatically sync and optimize their product listings. With TAKU, merchants can choose to send their existing POS product information with the built-in feature to unlock the free product listings. Because this is a built-in integration right in the POS, there’s no data entry required. To learn more, click here.
TAKU’s integration with Google also allows you to display your product catalogue online through Google’s “See what’s in store,” a free showcase directly below your Google store listing. SWIS lets you display your store’s stock and products online with real-time stock updates, attracting nearby shoppers to your store.
As the saying goes, showing up is half the battle. Shoppers need to know when your store is actually open. A shopper that shows up to a closed store because the opening hours listed for your business on Google Maps are outdated likely won’t be back. Make sure you have a verified Google My Business (GMB) store listing and keep your store hours up-to-date. If you’re not using GMB yet, do it right away as it’s the best free online marketing tool available to small businesses. For more information, check out our blog post about why retailers need Google My Business.
Contactless payments are not only convenient, they also provide retailers with a safe and secure way to take payments in-store. Throughout the pandemic, contactless transactions have increased and even become a preferred payment method among consumers. Offering contactless payment will help customers feel safer when purchasing as they don’t have to touch high contact surfaces such as PIN pads or checkout counters.
Due to the COVID-19 pandemic, the demand for contactless payment and pickup methods has significantly increased and stores that offer them will be more attractive to customers when they’re choosing where to shop.
One thing to remember though, is that contactless payments may not be EMV and therefore you may be liable for chargebacks. Prior to the pandemic, merchants would generally set their contactless limits at $50 to $100 per card per day but since March, many retailers have opted to increase the limit to make it easier for customers to buy more when they are in-store. But higher tap limits will increase the chance that those merchants will be responsible for higher-value chargebacks. Make sure to check with your merchant processor regarding liability and what you can do to protect yourself if you ever need to appeal a chargeback (e.g. getting signatures, installing CCTV cameras, etc.) if you are considering adding contactless for the first time or increasing your contactless daily limits.
4. Buy Online, Pickup In-store
For customers that are not comfortable shopping in-store, you can create a contactless retail experience with buy online, pickup in-store (BOPIS) or pickup at curbside. Shoppers can use your website to browse items, pay online and simply drive to your location when their order is ready for pickup. Once it is safe to offer in-store pickup in a safe, efficient manner, this is always our recommended fulfillment option for retailers that have physical stores. In-store pickups are not only more cost-effective (e.g. no packing or shipping costs), they generally have lower return rates since people can check products prior to pickup and, most importantly, they can lead to higher-margin impulse buys when shoppers see other products they might want to purchase once they are in your store. This is why it is important for retailers to plan carefully where they will place their pickup location in-store. It should be a location that allows shoppers to feel safe (e.g. allows enough space for social distancing) while making it convenient for them to see and pick up additional items quickly.
To make it easier for their staff, retailers should consider enabling staggered pickup times at checkout. This way, long lines and crowds can be avoided as customers must make an appointment to pick up their purchases. All-in-one sales platforms such as TAKU have a built-in function in their online store builder to allow shoppers to choose a pickup date and time at checkout.
5. Exclusive In-store Promotions
Running in-store promotions is a tried and tested way to drive foot traffic. However, retailers need to be strategic about how they run promotions so that they can maximize profitability. Using promotions to generate foot traffic can be done by creating exclusive in-store offers which incentivize customers to come to your store rather than shop online.
The following are some promotional strategies retailers can use:
Exclusivity with Private In-store Appointments – this strategy works particularly well if you are selling higher-value products that can benefit from having a sales associate involved to answer any questions
Exclusivity with In-Store Promotions – use your email marketing lists and social media posts to promote special offers to your best customers with limited time/quantity in-store only promotions specifically for them
In-Store Bundle Discounts – this strategy is particularly useful when you have excess stock you are looking to get rid of but want to ensure a minimum basket size in-store
Surprise In-Store Markdowns – random markdowns such as “score of the week” are effective in attracting both new and returning customers. These promotions are usually less risky as you know exactly how the discount will affect your margins. A smart POS system can analyze in-store promotions, allowing store owners to see trends and margins.
Conditional In-Store Offers – examples include spend a certain amount and get a free item, buy a certain item and save a percentage off your entire order etc.
Want more retail tips? Find out more about retail merchandising below
Your business category on your Google My Business listing is used to describe the type of business you operate (pet store, hardware store, grocery store etc.).
It’s important to be specific when choosing your business category -the category you choose determines how local shoppers find you!
For example, if your primary category is “pet supply store”, your business will show up on Google when shoppers search for “pets”,”pet food”, or “pet supplies” in the area.
Important Things to Note
You can only select 1 primary category for your GMB listing.This is the category that people see on your business listing. It is also the most important – Google prioritizes your primary category in it’s search algorithm.
You can select up to 9 additional categories (other than your primary category) to describe your business. Focus on selecting the most relevant and specific categories for your business.
You can’t create your own category. It is best to choose a more general category if you cannot find the one that you had in mind.
Google can detect category information about your retail business from across the internet (including your own website and other mentions from across the web).
Which can be broken down into the following points:
1) Be as specific as possible when choosing a primary category. The more specific you are when choosing your primary category, the less local stores/businesses you will be competing against. For example, if you sell gift baskets, choose “gift basket store” instead of “gift store”.
2) Your primary category and additional categories should describe your retail business as a whole. Don’t add additional categories in an attempt to list all of your products, amenities, and services. For example, if you run a furniture business that also includes a pastry shop, avoid adding the category “pastry shop”. Instead, the pastry shop owner should claim their own listing and choose “pastry shop” as their primary category. Google suggests that you select categories that complete this statement: “This business IS a” rather than “this business HAS a”.
3) Try minimizing the amount of additional categories that you add. Although you may be tempted to select as many categories as possible, it’s important not to. Doing so will negatively impact your store’s local ranking. Only choose categories that directly apply to your business!
Note: Skip adding categories that seem redundant. Again, you should focus on adding the categories that are most specific to your business. Google will do the rest of the work! For example, if you choose the category “children’s furniture store”, Google will implicitly add more general categories like “furniture store” and “children’s store”.
For more information, on how to choose a business category, click here.
It’s the single most important tool that store owners can leverage to gain local exposure. But it’s not enough to just have a listing, you must optimize it so you can reach as many local shoppers as possible.
In this post, we’ll discuss the first step in optimizing your business listing.
What is NAP Consistency?
To get started, Google My Business will request basic store information including your store name, address, and phone number (also known as NAP).
This will act as the starting point for your store’s local seo.
It is extremely important that the NAP you provide Google My Business is exactly the same as the information listed on your website. Otherwise, your ranking in search results will be negatively impacted.
In fact, your store’s NAP should be consistent across the entire web – including other local directory listings and your social media.
This is known as NAP consistency: it can be defined as having your store’s name, address, and phone number (NAP) consistently listed the same across the entire web.
NAP is critical for any retail store that wants to rank high in organic search and be found locally. This is because NAP is what causes your retail store to appear in local or geo-targeted searches. In other words, when a user searches for product or store information, Google uses NAP information to decide which stores to display in the search results.
NAP Helps Google Determine Legitimacy
It’s important to note that Google prioritizes businesses and sites that it believes to be legitimate. And to determine the legitimacy of a business, Google will reference how a business’s NAP appears across the web (including websites, local directory listings, social media profiles etc). If this information is not consistent, Google won’t know to display your store information to local shoppers.
NAP Consistency Checklist for Retailers
1. Decide how to format your name, address, and phone number.
Tip: Keep your business name, address, and phone number consistent. For example, if you use Allison and Bret’s Pet Store, 123 Main street, and 555-555-5555 on your website, don’t use AB’s Pet Store, 123 Main St., or (555)-555-5555 on Google My Business.
2. Post your NAP on your website. You’ll want to ensure that it is visible on specific parts of your website including: a prominent location on your homepage, your contact page, and the header/footer on the rest of your webpages. You may also want to include an embedded Google Map of your business address on your contact page (this acts as a strong local SEO signal).
3. Post your NAP on your Google My Business listing. Remember, it has to be exactly the same as the information listed on your website.
4. Improve local SEO by listing your business on local directories. Again, NAP on each listing should be consistent with your Google My Business profile and your website. The following are some online directories that will help your store appear in local search results:
Bing Place for Business
5. Add your NAP to your social media accounts (Twitter, Facebook, Instagram, Pinterest etc.).
6. Once your NAP is listed across the web, make sure to periodically check that it is accurate and consistent.
Looking to increase foot traffic and store sales? Easily implement Google Local Inventory ads with our new Google integration. Learn more here.
Google Local Inventory Ads (LIA) significantly increase retail store sales by turning nearby shoppers who are searching online into in-store customers.
River Island, Best Buy, and Williams-Sonoma Inc. are examples of retailers who have successfully leveraged Google LIA together with their POS systems to grow foot traffic and sales. Now, smaller retailers have the chance to do the same with a minimal budget.
Keep reading to find out how you too, can take advantage of this opportunity to increase your retail sales.
Local and Mobile Searches Lead to In-Store Purchases
There are two factors that make Google LIAs so effective:
For retailers, this means that there is a lot to be gained by being easily found online. The challenge then becomes figuring out how to give target shoppers the answers they are looking for at the exact moment that they are searching.
This is where Google Local Inventory Ads come in.
Google LIAs helps store owners succeed in these micro-moments – by capturing shopper intent and most importantly, the sale.
What are Google Local Inventory Ads (LIA)?
Local Inventory Ads showcase product and store information to nearby shoppers who are searching on Google. They are different from traditional Google ads as they are designed to drive shoppers to your physical store. While users also have the option of purchasing online (if you have an e-commerce store), LIAs are meant to attract nearby users and only show when a shopper is within a certain range of your store.
When shoppers click on an ad, they are taken to the local storefront page which can be either a Google-powered product listing or your own e-commerce site. Here, they can view other in-stock merchandise as well as important store information such as business hours, directions, current promotions, and more.
Below is an example.
When I search for “laundry detergent near me”, Local Inventory Ads appear next to the search results. Both Canadian Tire and the Home Depot are currently running LIA campaigns for laundry detergent (pointed out in red below).
I know that at Canadian Tire and the Home Depot, the items are definitely in stock because of the “in store” label.
How do Local Inventory Ads Work?
Let’s take a look at the example below.
Canadian Tire is looking to increase foot traffic to their physical stores. So they’ve purchased Local Inventory Ads hoping to target local shoppers like me. They’ve set up a Google Shopping campaign that showcases ads to shoppers within a 45 km radius.
As you can see above, I’ve made a search on my mobile phone for a ceramic stove top-cleaner. Like most people (87% of shoppers), I frequently turn to a search engine as a resource for product information.
By looking at the search results, I can see that Canadian Tire has what I need in stock and the closest store is only 2 km away.
I decide to head to the store because I am certain that they have the product that I need. A store associate is able to tell me more about the product in-store and even recommends I try out a surface scraper. After my conversation with a store employee, I’m happy to purchase both products.
LIAs let local shoppers know that you have the items they are looking for – at the exact moment that they are searching for it. The ads even create a sense of urgency and encourage shoppers to act by letting them know when certain items are low in stock.
2) Advanced Geo-targeting Capabilities: Target local shoppers who are actually nearby the store and are looking to purchase. Advanced geo-targeting capabilities allow retailers to reach target shoppers within a certain km radius.
3) Measure Campaign Results: See how your ads are impacting your bottom line. Monitor the effect LIAs are having on foot traffic and in-store sales – and adjust your campaign bids accordingly.
4) Gain a Competitive Edge as an Independent Retailer: In the past, Google LIAs were only available to national retailers. But now, independent retailers have the ability to run high-performing ads on Google with a minimal budget. For as little as $150-$300 per month, store owners have the ability to drive local foot traffic and increase store sales.
5) Automatic Ad Optimization: To minimize marketing costs, LIAs automatically turn off when products sell out. Not only does this benefit your bottom line, it also results in a better shopping experience for your customers.
To learn more about how your retail store can easily implement Google LIAs to increase foot traffic and in-store sales, click here.