A Strategy to Protect Your Shop
The price of gas has skyrocketed. The price of food has jumped. Our customers are feeling embattled, they’re feeling the pinch. Inflation could hurt retailers.
Many consumers are responding by cutting back or looking for less expensive alternatives. Many more will do the same as inflation takes hold. So how should a retailer respond?
Not by cutting prices, that’s clear. The cost of running our business is going up. If we cut margins, most of us will have trouble showing a profit this year.
A better alternative is to bring in lower-priced alternatives to your top sellers. And then present them in a “good”, better”, “best” grouping (G-B-B).
Customers who are feeling the pinch will choose the lower-priced option. Customers, who are still feeling flush from the money they saved during the pandemic can pick the “best” option. But most will pick the middle “better” option.
It’s called the “Goldilocks effect”. When presented with a choice of three, people tend to pick the middle option.
A G-B-B strategy is a great way for a retailer to fight inflation. You don’t have to bring in a ton of lower-priced options. Just bring in a small selection as alternatives to your top sellers. If you sell out, well, there’s always the middle option.
This inflationary period will pass. The “good-better-best” offer may just be what you need to get you through it.
