Retail Pricing Goes Beyond Troublesome Tariffs

It doesn’t matter what side of politics you are on, the new administration in Washington has unleashed a wave of uncertainty. With many retailers already operating on thin margins, tariffs have struck fear and many businesses are in the crosshairs of disruption. But most have had to deal with disruption before. The Great Recession in 2008, and Covid pandemic are recent examples that come to mind.

While retailers can diversify their supply chain, collaborate with suppliers and use artificial intelligence to manage the situation, consider that there is a bigger issue here — it’s time to examine your reliance on perceived discounts.

Yes, some categories can tie up your money by pre-buying everything and hoping you’ll make the smart choice. But it is doubtful tariffs will be fully removed anytime soon.

Maybe this is a chance to look at how you’ve tried to show you are a customer’s friend by discounting everything off the manufacturer’s suggested retail price (MSRP).

You know that you never charge MSRP — and so does your consumer. But a more troubling issue is that it comes from not believing a product is worth more than whatever bright tag you hang on it.

The core problem is retailers who can’t maintain prices often don’t believe in their pricing.

There are a lot of ways you can price your merchandise, but pricing based on what you think it should cost may lead to lack of confidence in original pricing, employee skepticism about value and mixed messaging to customers

So, when prices have to go up — tariffs or not — you may get scared and try to maintain those false prices.

Embracing True Value
The era of buying low, pricing high and discounting is coming to an end. You can have a special buy, of course. But that appliance that is always on sale? Maybe that’s a wakeup call that you can only sell it at a discount because no one believes it is worth more.

If your team can frame value in something on sale, why can’t they build value in the product to begin with?

That way, no matter what happens with tariffs, you’ll find new ways to communicate with your shoppers.

Your team will understand that whatever the price, it is their job to sell it, and when you upgrade your selling skills, your customers will rave.

Avoid Tariff Talk
Don’t talk about tariffs to customers. It’s a loser’s limp, “It’s not us raising prices, it’s them.” Sell the value. Believe in your merchandise. Upgrade your offerings.

The money is in the showroom that sells the merchandise, not warehouses it.

In the end, that’s how great retailers build their business. Concentrate on what you can do to sell more to offset the fear in your head of what might happen.

Bob Phibbs, known as the Retail Doctor, is a renowned expert in brick-and-mortar retail. As CEO, he provides international business strategy, customer service expertise, sales coaching and marketing mentorship. An author of three books and motivational speaker, Bob recently expanded his online retail sales training program, SalesRX. This on-demand platform has led 83 per cent of clients to achieve double-digit growth within six months.