I like to keep fresh flowers in the house. My local famous-name supermarket sells roses for $10 a dozen. For Valentine's Day, they raised the price to $20. The result? Dozens and dozens of roses wilted on the shelf, and every customer I saw looking at the roses walked away ticked off.
The week after Valentine's, the sign was still saying $20 for roses that were on their last legs. I asked the clerk if the roses were going to return to their normal price. "They went back to $10 yesterday."
I saw boxes of unpacked flowers so I asked if she had fresher roses. "Yes Ma'am, but they sent us bunches of two dozen and I have to break them down and repack them before I put them out."
Hang with me because this is where it gets crazy. I told her I wanted two dozen so there was no need to break the package for me. She gave me the roses and told me she would have to ask about the price. "They're $10 a dozen so that's $20. Right?" Silly me.
She said they were $10 only if I bought them in a one-dozen bunch. The bunch of two dozen was more because I would have to pay "their" price. "So let me get this straight. You can waste my time and go through the labor cost, trouble and expense of repackaging the roses and charge me $20, or I can take the unbroken bunch of 24 roses now and pay $25?" Yep. Why? "Because corporate says so." I walked away shaking my head.
There are more things wrong with this picture than I can begin to count. And there are lessons here for anyone who owns a retail business. Perhaps the most important lesson is that your pricing has to make sense from the customer's perspective. If it doesn't, you won't move product, and what's worse you will frustrate your customer.
If you blatantly go beyond the point of perceived value, the consequences are much more than the loss of a sale. There's a fine line between raising prices to take advantage of a temporary situation and price gouging, so tread carefully here. If the store had kept prices at their normal level, no telling how many roses they could have sold in the Valentine's Day window.
As to the "corporate says so" situation, what can I say? Unfortunately, it happens repeatedly in this particular store. But's that's another article.
Bottom line here is that if I had another viable choice of supermarkets in my local area, I would leave in a heartbeat.
Do you have customers ready to jump ship? Do you know how your customers view your pricing strategies? If you're in retail, you would do well to find out.
An experienced business executive and organizational consultant, Jan Flynn teaches at the J. Whitney Bunting College of Business at Georgia College & State University.