Gold Mine Pesentation

Download
Share  Add to  Flag Embed
Uploaded from authorPOINTLite
Views:
 
Category: News & Reports..
     
 
License:   All Rights Reserved

Presentation Description

No description available.

Comments

Presentation Transcript

Slide1: 

W. FRANK DELL II, CMC DELLMART & COMPANY THE GOLD MINE IN RETAIL PRICING

AGENDA: 

AGENDA INTRODUCTION MINING OPPORTUNTIES PROMOTIONAL PRICING PRICING FOR PROFIT

Objectives: 

Objectives Identify pricing improvement opportunities Describe approach to achieve results Present new research

Scope: 

Scope Retail Food Excluding perishable commodities Mass Merchant - Basics Excludes fashion & seasonal

Observation: 

Observation Much of retail pricing seems to be follow the leader Not unlike a dog chasing its tail

Theme: 

Theme Price for the consumer Consider competition Price for Net Profit Not Gross Margin

AGENDA: 

AGENDA INTRODUCTION MINING OPPORTUNTIES PROMOTIONAL PRICING PRICING FOR PROFIT

#1 Slow Seller: 

#1 Slow Seller Why is an item a slow seller? Small consumer market Inadequate retail space Priced wrong

25,000 SKU’s In Typical Store: 

25,000 SKU’s In Typical Store 1,000 sell more than 1 case/week 4,000 sell between .5 and 1 case/week 20,000 sell less than .5 case/week Slow Seller

SKU Universe: 

SKU Universe Estimate 4 to 5 million Average store stocks .0056% Many unique items and opportunities Slow Seller

Approach: 

Slow Seller Approach

Case Study - Grey Poupon: 

Case Study - Grey Poupon Selling 4 units/week Prices $1.79 Increased price to $2.79 Sold 4 units/week Increased sales $4.00 per store Increased profit $4.00 per store Slow Seller

#2 Private Label: 

#2 Private Label If product quality is equal to National Brand Why is the price 25% plus lower?

Low Retail Not The Answer: 

Low Retail Not The Answer Private Label

Approach: 

Approach Private Label Note: Quality must be equal or superior

Value Concept: 

Value Concept Private Label PRICE QUALITY VALUE =

AGENDA: 

AGENDA INTRODUCTION MINING OPPORTUNTIES PROMOTIONAL PRICING PRICING FOR PROFIT

Why Promote?: 

Why Promote? Create merchandising excitement Attract customers Present savings Show value Reward loyal customers

Promotions Are Difficult: 

Promotions Are Difficult

Promotion Factors: 

Promotion Factors

Breakeven on 11% Deal: 

Breakeven on 11% Deal

Low Private Label Share: 

Low Private Label Share

Moderate Private Label Share: 

Moderate Private Label Share

Promotional Index: 

Promotional Index

Promotion Conclusion: 

Promotion Conclusion Low Private Label share Moderate Private Label share Private Label Private Label Natl. Brand Natl. Brand

AGENDA: 

AGENDA INTRODUCTION MINING OPPORTUNTIES PROMOTIONAL PRICING PRICING FOR PROFIT

Activity Based Costing: 

Activity Based Costing ABC is a cost allocation or assignment methodology Cost assigned based on the activities and drivers Activities are tasks within a process Drivers are factors creating costs

GM Vs ABC: 

GM Vs ABC Gross Margin Relationship between cost and selling price Not a predictor of profit Percentage ineffective during deflation times Profit Contribution Sales - Cost of Goods Sold = Gross Margin + Direct Revenue - Inbound Costs - Outbound Costs = Profit Contribution

Primary Processes: 

Primary Processes

Costs Follow Product Flow: 

Costs Follow Product Flow

Greatest Cost Is DSF: 

Greatest Cost Is DSF

Proposed Pricing Process: 

Proposed Pricing Process

Collect Competitive Data: 

Collect Competitive Data

Trigger Pricing: 

Trigger Pricing

Pricing Candidates: 

Pricing Candidates

Determine Price: 

Determine Price

Price Table: 

Price Table Department Category Category Sub Category Sub Category Sub Category Sub Category Image Item

VELOCITY PHILOSOPHY: 

VELOCITY PHILOSOPHY Faster sellers priced lower than slower sellers Reinforces low price image Basis for power curve

SIZE PHILOSOPHY: 

SIZE PHILOSOPHY Larger sizes priced lower than smaller sizes Promotes selling larger sizes Increase volume Lower transaction cost Supported by vendor pricing Lower bracket cost Lower transaction cost

FLAVOR/PATTERN PHILOSOPHY: 

FLAVOR/PATTERN PHILOSOPHY Create sub-group Price all items the same Even if cost differs Consumers perceive all items as equal Cherry Raspberry Orange Grape

Price Controls: 

Price Controls

Iterative Process: 

Iterative Process

Implement Price: 

Implement Price

Pricing Filters: 

Pricing Filters

Unlock The Gold: 

Unlock The Gold Understand your competition Price for net profit Consider all factors Competition Movement Cost Justify implementation Test item sensitivity

Slide47: 

W. Frank Dell II, CMC President DELLMART & Company 125 Hardesty Road Stamford, CT 06903 USA Tel: 203-968-8609 Fax: 203-968-8613 e-mail Wfdell2@msn.com