Grocery shopping is a common chore for just about everyone. Grocery and other department stores are now necessities that need to meet the demand of the public. So, it’s no surprise when you see different stores coming out with pricing strategies and setting prices to sell more as well as gain more popularity. So how do grocery stores set prices?
One of the most common methods of setting prices is the Dynamic Pricing. This form of pricing is also known as demand pricing where businesses set prices relating to the current demand and consumer behavior.
But there are other methods of pricing that I’ll be discussing in this article. So, keep reading till the end to find out everything there is to know on how grocery shops set prices.
How Grocery Shops Price Their Products?
As we already know, competition is increasing and consumers are now more aware of the products that they want to buy. With the internet being available every step of the way, and the e-commerce wave hitting the markets, consumers are now more informed about prices. They are now able to look up prices online and compare prices with other stores nearby.
With a herd of such price-conscious consumers, businesses need to be extra careful. They need to draw in more customers than their competitors down the street. As a result, small businesses have opted for ways to set prices that will popularize their stores.
The initial thought that comes to mind when talking about setting prices is making more profit. A business will eventually shut down if it is unable to meet its break-even point. In other words, they need to cover the costs with the revenue they receive. So, if the revenue is lower than the costs, the business will no longer be able to function.
So, here are some pricing methods grocery shops use to make profit while keeping their prices competitive –
This method of setting prices is quite popular amongst the retailers as they are able to make constant changes depending on the current market price. This method of time-based pricing will allow the businesses to attract more customers who are aware of the price changes and thus are looking to purchase products sold at those price changes relating to the market.
This pricing strategy is becoming more popular with the growth of online stores as they can easily change the prices depending on the demand.
This can also be termed as one of the most common pricing strategies. The downfall of this strategy is that the grocery stores will be selling one of their products at a loss. This seems pointless at first considering the fact that we're here to make a profit.
But the actual intention isn’t to sell the product at a loss. The main goal is to attract consumers with mind-boggling discounts and their attention on the market. Once these customers get a whiff of that discount, they won’t hesitate to enter the stores.
The customers will now be delighted to purchase the product at such a great bargain, but down the line, they will also purchase other products in the store and this will be profitable for the grocery store as they have now drawn in actual customers who might just become regulars at the store.
Also known as multiple zone pricing, zone pricing creates a boundary. Those inside the boundary or the specific region will be charged the same price. This is done to optimize their prices and cater to the people who will most likely visit their store.
This is carried out by keeping the buying habits of regular customers in check and doing an overall profiling. This is extremely helpful as those from a higher society will not regularly enter a store from a poor neighborhood.
By meeting their specific needs, businesses can determine where and how the prices of goods will vary depending on the customers they’re selling to.
There are plenty of other strategies being used while setting prices such as competitor behavior, brand availability, etc. The ones we talked about in this article are the most sought after and popular methods even though they might have their own share of troubles.
Hope you understand how do grocery stores set their prices. Have a nice day!