Warehouse war strategies

By Robert C. Vereen Executive Director Home Center Institute

I nSf YEAR, we talked about L the disastrous trend in this industry to engage in a price war, and the need to focus on improving customer service through better employee training as an offset to an ever-widening and more destructive price war.

The pricing wars have continued, and the casualties have mounted. flechinger declared itself out of the warehouse business as this success- ful, always candid giant found warehouses discouraeed female traffic and did not prod-uce acceptable rates of return unless one ran the only warehouse game in town.

Mr. How has been parceled off, largely to Builders Square. Homecraflters has been bought by Wickes. Zayre bought HomeClub and finds losses Iarger than expected and unacceptable. Pay'n Pak's earnings dropped sharply.

Ilow can one remain a profitable olaver in a field so dominated bY briiing images? One of the needs is to develop a pricing strategy that identifies the price-sensitive items and allows you to create the right pricing image on those items while finding other products on which tiny margin gains can be achieved.

The whole concePt of Priceshopping by the consumer, initiated by home center efforts, makes large-margin gains on individual items or merchandise classes increasingly difficult to attain.

Home Center Institute has been seeking ways to develop their pricing strategies during this past year. and in 1987 is offering two new services.

Price-shopping comPetition is nothing new. It's been done for

Story at a Glance

Casualties mount in Price wars. strategy must be developed . . . largemargingains difficult to attain new developments in price checking.

years, but not as regularlY as. it should be. Now an in-store Price auditing system has been developed that will check the everyday shelf price of 1,200 significant items in a variety of storesmass merchandisers, home centers, hardware stores, etc.in keY markets around the country. Subscribers will get these Price checks in an actionable format as they are developed bY market once a year.

- What should be the "right" advertised price? No one can be low on every item everY daY and stay in business. Is there a comfort zone for a line or product? A new service checks print advertising monthly and issues bY-item information showing advertised Price, resular price, brand name. model nfmUer, and description. as well as who advertised the Product, where and when. Capable of sorting more than 10,000 advertised items monthly into 3l merchandise categories, this is Proving to be a useful management tool'

These are two responses to needs in this highlY comPetitive retail marketplace today.