Customer case: New price model and online shop increase retailer’s market share and profits

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Customer case: New price model and online shop increase retailer’s market share and profits

Profit streams down new sales channel for bricks-and-mortar retail chain.

Increasing market share and profits at the same time is difficult, but PriceGain helped this retailer do exactly that.

Situation: Online sales were being considered to bolster existing retail efforts.

Our client has successfully maintained a premium brand position for its large chain of traditional brick and mortar stores. The management team faced a strategic decision to open an online store but was unsure how to establish prices across the two channels. Should a price level similar to online competitors be implemented for products sold on the internet? This is how most of the clients competitors do business. Or can the client charge a premium price through its online store that is more in line with the prices in their physical stores?

Solution: Research led to a new pricing model and optimal pricing relationships.

By conducting a nationwide survey, PriceGain analyzed the willingness to pay for the products in different categories at the major retail stores across the country, both on the internet as well as in stores. Using this information together with costs and market data, a model was created to find optimal relationships between prices at both the competitors and the companys existing and internet stores.

Results: Possible profit increases of 40% plus an overall market share increase of 2%.

The project verified that the ability to directly sell products online would substantially increase gross profits and market share. The loss in sales that the company is experiencing with competition today will to a large extent be captured by its own internet store. By optimizing prices, the company would increase gross profits by more than 40% once an online presence is established and grab an additional 2% of the market.

14-05-22|