Margins matter in RSR’s newest benchmark report
According to “Tough Love: An In-Depth Look at Retail Pricing Practices,” the impetus to court top-line revenue is largely a remnant from the thick of the recession, with interest in using price to drive overall sales peaking in 2010. Obversely, survey respondents have maintained their interest in leveraging price to improve margins, but the ones who have held on to their top-line fixations have fared the worst in recent years.
The disparity between “Winners” and “Laggards” is particularly striking in the survey. Sixty-five percent of laggards maintained their focus on top-line revenue, compared to 28% of winners. Meanwhile, 59% of laggards minded their margins, compared to 66% of winners. Generally speaking, retailers’ interest in using price to drive revenue fell from 58% to 39% over the last three years.
Under one interpretation of the numbers, lowering prices in a ditch-all effort to acquire more revenue is a strategy likely to do retailers more harm than good.