Controlling price erosion in the omnichannel shopping environment | GFK

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While eroding prices of technical consumer goods may excite the increasingly savvy and deal seeking Connected Consumer, they can be a big problem for product manufacturers and their retailers.

Lower prices mean lower margins, and in today’s evolving omnichannel environment, it’s important to understand which promotions with which retailers bring back the highest ROI, as well as the impact retail promotions have on sales and margin.

For example, in the durable goods market, a 10% cut in price could mean a 25 – 30% loss in margin for the retailer.  This is a big challenge if manufacturers have hundreds or even thousands of units in stores and distribution centers.

Often a price drop starts with a single retailer, which can be due to a consumer price promise, pricing policies, or pressure from their competitors.  It’s important for the manufacturer to be able to spot price erosion early and act quickly before the price becomes set at that level.

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Controlling price erosion in the omnichannel shopping environment.