Archive for December 16th, 2008

In this uncertain economic climate, many retailers are immediately going to the one thing they are sure that works – cutting prices. And they are marketing that fact, trumpeting it from the rooftops – “We’re Cheaper Than the Competition!”

If that’s not the stupidest idea I’ve ever heard, it’s in the top five.

Repeat after me campers: COMPETING ON PRICE NEVER WORKS.

Say it. Repeat it. Learn it. Believe it. Why? Because there’s always somebody willing to go lower on prices than you are. It’s true. No matter how much you cut, there’s always going to be somebody that is willing to undercut you. Even worse, it turns out that low prices are addictive. Like rebates, red tag sales, employee pricing for everyone and so forth, cut your prices and people will expect it. Raise them back, and customers will simply wait for you to cut ‘em again. And you will. To survive.

So if cutting your price is a sucker bet, what will work?

Service. Customer relationships. Building trust. Innovation. Unique products. Loving your customers and treating them with respect. Pick one. Pick two. Better still, pick ‘em all.

So the nex time you’re tempted to cut prices, stop, think, and don’t do it. And if you do cut your prices, for pity’s sake, don’t brag about it. Unless you like losing margin, forever.