Full Price Food Retail Has Lots of Pricing Flexibility
In the world of full price retail, you will find the same product selling for lots of different prices. Check out 10 stores and you may very well find 10 retail prices. Standard margins vary by retailer and product category. Go back next week and those prices may be different as sales come and go. In short, as food liquidators we find pricing is quite dynamic with full price retailers.
Discount Retail: Not So Much
In the discount retail world, there is often far less flexibility. If your product ends up on the shelf of a dollar store, guess how much they’re going to sell it for? Other types of discount retailers have more flexibility, but they still have a handful of price points that they want to slot product into. These are magic numbers that get it moving off the shelves.
These same retailers also typically have target margins that they need to hit. You may have a product that normally retails for $4.99 but needs to be at $1.99 to sell at a discount retailer. If they operate with a standard 40% margin, they need to buy it at $1.20 landed. Subtract out logistics and selling costs and maybe you end up getting $0.80/unit to make the math work for everyone. $0.90 doesn’t work and $0.70 is unnecessarily low.
Price Closeouts To Sell Quickly
Very often we run into the dilemma where a manufacturer is holding out for a higher price but after thousands of deals and staying in touch with the discount retail floor, we know to a pretty high level of certainty what the price needs to be. Sometimes things ends badly when just too much time has passed waiting on a price point that isn’t going to be and the code situation deteriorates to the point where the retailer can’t take the product at any price.
With Closeouts, Price Isn’t Necessary Everything
Of course there are situations where there is more flexibility on pricing and then it comes down to plain old selling. How well is the product being merchandized to the discount retailer? Is there a competitive pricing analysis included so they know their customers aren’t going to find it for the same price somewhere else? Sometimes you just need to get on the phone and paint a picture for an overworked retail buyer who just doesn’t have the bandwidth to imagine what it might look like. Make it easy, eliminate the risk and good things can happen.
But very often there just isn’t room to negotiate so you’ve got to hit the price point and move on.