Q: Prices on goods made in Europe and Asian have skyrocketed. How should retailers deal with vendor price increases?
A: Like with anything in life, you have a choice – you can either look at price hikes as an opportunity or as a problem. If you look it as a problem, you may have a tough road ahead of you. Your customers will experience sticker shock and you will cut back on your spending and the kinds of assortments you offer.
But, if you look at it as an opportunity, you may experience very different results. By embracing high price points you can do more business with your good customers, allowing you to offset the lack of traffic that many retailers face. With higher prices you also have the opportunity to make more money per transaction. Just keep in mind that if you want to seize this opportunity you have to be prepared to realign your vendor structure and move into new vendors and new vendor stories that justify the costs of the new goods.
Date answered: 07/17/2008
Question raised by: E. Price