How Do Retailers offer Low Prices

Every Day Low Prices
Categories : Retail and Whole Sale
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Everyday Low Price (EDLP) is a pricing strategy used by retailers which promises customers the lowest prices in their store without having to use a coupon, wait for a sales event, or take any other actions to get a reasonable price on the items they purchase – The question is how can they do this?

Five Ways to Reach at Low PricesRetailer’s Strategies

  • Retailer’s Best Bargain with suppliers – No Middleman involve
  • The Best Inventory Management
  • The Efficient Operations
  • Building High Customer traffic
  • Cross Docking at Stores

These are the answer to the question. Each heading has its explanations according to time and space. Let me try to explain each head:

Retailer’s Best Bargain with suppliers – What it means?

The best bargain means

  • Higher margins – Front & Back
  • Payments Days
  • Delivery Timings & Terms
  • Advertising

What are these terms & how supplier negotiate with Retailer, its all depends on the buying power of the retailer. That’s why only big retailers are in position of giving the every day low price. For the further interest you can reach the blog.

The Inventory Management – Use of Technology

  • Centralized Record of All Products:
  • List all the products
  • Product name
  • Stock-keeping unit (SKU)
  • Brand
  • Tracking the Inventory – Reconcile with the sales & delivery

The Retail store which have the resources to mange the inventory well, they will lose less money because of theft, slippage or leakage. This saving they translate in to their prices by giving every day low prices.

The Efficient Operations – Low Cost operations

  • The Up to date and Complete assortment – Dynamic
  • Layout of Store / warehouse
  • Rollout of promotions, campaigns and product launches
  • Reporting and resolving maintenance and facilities issues
  • Product and inventory management -Conduct regular stock checks
  • Perfect your order rate
  • Cross-merchandising -best sellers, versus those not selling so well

A comprehensive operations strategy is a critical element to driving retail success and delivering every day low price. The inventory management and agile supply chain are also the key components of the efficient operations.

Building High Customer traffic

More customer & sales bring more bargaining power with the supplier. The retail squeeze more from supplier with increasing traffic. This also reflect in the prices of the stores.

Cross Docking at Stores-Economies of Scale

The store which offer every day low price also become the whole seller for the small retailers. He shift the merchandise from supplier truck to the customer truck – This is called cross docking. This save cost of loading/unloading. Some times supplier’s truck directly goes to customer location in the case of cross docking which save more money & again translate in to the every day low price.

Walmart Supply Chain
Cross docking Do’s & Don’ts

You can see also my article on the retail execution with bakery prospectus.

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