The recent legal action by the ACCC against Coles and Woolworths is a shocker. Focusing on allegedly misleading discount campaigns will bring retail pricing strategies under intense scrutiny.

What's at Stake in the ACCC vs. Supermarket Giants Case?

At the heart of this legal battle are the "Prices Dropped" and "Down Down" campaigns run by Woolworths and Coles, respectively. The ACCC contends that these promotions were misleading due to artificial price inflation before the discounts. 

Read what they are saying about one item here.

Now, in total, the ACCC is taking to the Federal Court:  

• Woolworths: For 266 products affected over 20 months
• Coles: For 245 products affected over 15 months

The outcome of this lawsuit could have far-reaching implications on our pricing strategies, especially in our current never-ending inflationary environment.

The Numbers

These aren't small numbers; the potential penalties are significant, $50 million for each breach. That should be enough to make any retailer take notice.

A Common Scenario

Imagine this scenario: You've been selling an item for $6 for a while. Your supplier increases their price to $5, so you bump your selling price to $10. Then, a week later, you decide to run a 20% "discount" promotion, bringing the price down to $8. In retail, this is relatively common.

Based on what the ACCC is saying, your initial pricing and cost-based increase are standard practices, so that is okay here, but that "discount" promotion could land you in hot water. Why? Because your discounted price of $8 is higher than your original long-term price of $6. A week is hardly a reasonable period.

The Grey Area

The tricky part is determining a reasonable period before offering a discount.

"What if you offer a discount three weeks after increasing the price, a month, a few months, etc? Would that be misleading or fair?" The law needs to be more transparent on this, which leaves us retailers with a problem of what is reasonable.

My Two Cents

Based on my years of experience, it's best to err on caution. If you've just had a significant price increase, think twice before slapping a discount label if the final price is still above your long-term price point. Your POS System shows a history of when you sold an item and for how much. It will also inform you how long the new price has been in effect. I will also supply you with many of the records you may need.

Let's tweak our scenario a bit more:

1. Original cost: $3
2. Original selling price: $6
3. New cost: $3.50
4. New selling price: $7
5. 20% discount price: $5.60

In this case, your discounted price ($5.60) is below your long-term price ($6), so it will likely be okay.

The Bigger Picture

This case against Coles and Woolworths isn't just about big supermarkets. We must be more mindful of how we present our pricing and promotions to customers.

A Wish for the Future

Would it be great if suppliers informed us about price increases? This would allow us to prepare and communicate proactively with our customers, but we can discuss that in another post.

In the meantime, please ensure that your pricing practices comply with the current legal standards and keep our customer's trust. After all, that's what good retailing is all about.

Many businesses often accidentally sell below cost in a tale as old as retail. This is a ticking time bomb for many retailers, particularly in today's world, where margins are razor-thin; understanding the actual cost of your products is required to survive. We had a software user who, until she implemented our Point of Sale (POS) system, did not realise she'd been selling a popular item at a loss for months. Her story isn't unique, but her turnaround is. Let's dive into how to avoid this common pitfall and how to use technology to stop this happening.

The Peril of Pricing Below Cost

Selling below cost quickly boosts sales, but it's a dangerous game as these loss leaders can easily backfire. Here's why:

• Eroding Profits: Every sale becomes a loss, slowly draining your business.
• Setting Unsustainable Expectations: It can only last so long, and you risk losing your customer base once prices increase. Customers who buy as you are cheap do not stay when your prices get real.

How it happens

Many retailers can miss the full impact of pricing below cost because there are many more factors than their purchase price. Consider:

1. Shipping and handling costs
2. Storage expenses
3. Staff wages for handling and selling the product
4. Marketing and promotional costs

When you factor in these hidden expenses, that price might cost you more than you think.

Get Pricing alerts

Our Point of sale software can be set up to issue a special warning if the price of a stock item being scanned is under cost. This warns people scanning that item at the cash register that something is wrong and needs to be checked.

If you feel that you may have a problem here or you want to check if you are selling too many items at huge discounts, I suggest you run the following report. 
 

Press transaction enquiry, as highlighted in red. Now select the relevant options. It is actually a good idea to do it once and then do it again with different departments that appear and check out the results.

How POS Software Can Be Your Pricing Guardian

Our modern POS systems are more than just fancy cash registers. It is your first line of defence against pricing errors and a powerful tool for retail pricing strategy. Here's how:

1. Real-time Cost Tracking: Keep tabs on your actual costs.
2. Automatic Pricing Alerts: Set warnings for items sold below cost or at low margins.
3. Detailed Profit Margin Reports: Analyse which products are your profit heroes and which are the villains.
4. Set Minimum Margins: Establish a floor for your profit margins and stick to it.
5. Regular Audits: Use our POS reports to review pricing regularly.
6. Smart Discounting: When you offer discounts, ensure they're strategic and profitable.

FAQ: Common Pricing and Inventory Issues

Q: How can I quickly identify products that are selling below cost?
A: A sound POS system will allow you to set up automatic alerts for items selling below a certain margin threshold. You can also run regular reports to identify low-margin products

Q: How often should I review my pricing strategy?
A: Conduct a thorough review monthly at a minimum.

Conclusion: Technology as Your Profit Partner

In today's retail landscape, selling below cost isn't just an occasional mistake—it can be a business-ending blunder. But with our POS software and a keen eye on your numbers, you can turn potential losses into consistent profits. What we have is a powerful tool for making informed decisions about your pricing strategy. 
 

Bad pricing can be a death sentence in retail. It would be best to have the right pricing strategy to operate in this ultra-competitive landscape. Here is the game-changing solution to help you achieve that.

The Pricing Predicament: Challenges Galore

• Customers question your prices, leaving you scrambling for justifications.
• Suppliers are inquiring about your price, and you're unsure how to respond transparently.
• Endless hours spent analyzing historical pricing data to determine what works for you.

We've developed a cutting-edge solution that puts you back in control of your pricing strategy.

Introducing the Game-Changing Pricing Tool

Our innovative Point of Sale (POS) software boasts a revolutionary "Price Change" feature that revolutionizes pricing management. With just a click, you gain access to:

• A comprehensive pricing history for every product
• Effortless cost and retail price comparison (displayed in red and blue)
• Historical data to inform your pricing strategy

This will set you apart from the competition.

How to use this price-changing tool

You will find a Price Change screen in green above in the stock item. 

Now when you click that, you get another screen with the cost price shown in red and see the blue arrow, you have your retail price. 

Now, you have a complete history of the costs and retail prices and can sort by date. This can help you determine your retail pricing strategy and the right product price.

With just this click, you gain access to:

• A comprehensive pricing history for every product
• Effortless cost and retail price comparison (displayed in red and blue)
• Historical data to inform your pricing strategy

In my experience, the process is quick to do. Also, what I find very useful is assessing the price vs. sales. There is no point selling too cheap if you can get more.

Elevate Your Retail Success to New Heights

Don't let pricing hold your business back any longer. Take control of your pricing strategy today and unlock a new level of retail success. Your business's future is in your hands.

Studies have shown that if you reduce a price, you are better off using a price-off amount rather than a percentage-off. So **price-off discounts beat percentage discounts for driving sales in retail.** I know this may seem counterintuitive, but stick with me here. I'll explain why opting for a concrete dollar over a vague percentage is the more intelligent move for your brick-and-mortar shop.

First off, percentage discounts don't speak to customers. Sure, 10% off sounds impressive in theory. But without a calculator, how many folks can instantly compute the actual savings in their heads? Not many! And even if they can do the math, that extra mental effort creates a barrier. 

Consider this: Instead of announcing a price reduction of 10% on a $10 item, you are better off announcing a price reduction of $1. 

In both cases, the price was reduced from $10.00 to $9.00, but the $1 is real, and 10% is not. 

Now we're talking. **Customers get that - no fuzzy math is required.** A concrete dollar amount is both real and motivating. It's an instant win rather than a puzzle to solve. With a set dollar amount, the deal clicks. No, memorizing the original price, no multiplying - just a straightforward new lower price. 

Okay, you're convinced that price-off discounts are the way to go. But how do you set them up in your point-of-sale system? Don't sweat it - it's a piece of cake:

1. Tap the "Discounts" icon on the main screen (see red arrow in diagram above).
2. Select the "Price-Off" option.
3. Punch in the dollar amount, like $7.
4. Choose which products get the savings. 
5. Hit "Save" and you're done!

Your customers can get communicated, math-free discounts. 

Here is how you can do this at the point of sale. See the diagram above where the red arrow points. This discount can be set up to be preset, so it is one button handling.

Note that if you mucked it up by changing the prices and want to start again, press the F7 button.