When we go to the shop or market, we can find that there are many catalogues on the shelf for reading. From the catalogue and advertisements in the shop, customers are willing to buy the products which are on promotion. However, with the increasingly rapid pace of life today, little customers are less willing to spend time searching for deals. So the retailer moves toward the everyday low prices(EDLP).
EDLP is a pricing strategy that promises consumers the lowest available price without coupon clipping, waiting for discount promotions, or comparison shopping; also called value pricing.(Allbusiness.com, 2010) Everyday low pricing strategies have become a feature of the promotional landscape and have been used by retailers to distinguish themselves from other retailers.(Ainsworth Anthony Bailey, 2008)
When Sam Walton opened the first Walmart in 1962, he took out a pricing philosophy “Always Low Prices” . Today, Walmart still commits to bringing great products at its Every Day Low Prices to customers. In 2012, Walmart reported that second-quarter net sales gains of 4.5%, with total sales rising to US$113.5bn in the three months to 31 July. And Wal-Mart CEO Mike Duke attributes the firm’s success to its EDLP strategy.
EDLP saves retail stores time and effort to market the promotion event and mark down prices in the store. The retailer can save money on advertising, because it dones’t need to have a weekly or monthly advertising budget. With old pattern of promotion, the retailer need to prepare for the activity which is quite difficult for deciding the amount of products and delivering. While, with EDLP method, the retailer can make ordering inventory, delivery, and handling more efficient. Within the competition, the retailer can avoid a price war, because the customers believe that the price is the lowest. Meanwhile, customers can save money with the lower prices. With a long term of buying, the retailer can gain customers’ loyalty.
The retailer should make full use of EDLP strategy, and avoid virulent price competition. At the same time, customers should avoid impulsive buying.
References:
1. Hans Pechtl, 2004, ‘Profiling Intrinsic Deal Proneness for HILO and EDLP Price Promotion Strategies’, Journal of Retailing and Consumer Services, Volume 11, Issue 4, Pages 223-233
2. Ainsworth Anthony Bailey, 2008, ‘Evaluating Consumer Response to EDLPs’, Journal of Retailing and Consumer Services, Volume 15, Issue 3, Pages 211-223
3. Paul B. Ellickson, Paul & L.E. Grieco, 2013, ‘Wal-Mart and the Geography of Grocery Retailing’, Journal of Urban Economics, Volume 75, Pages 1-14
4. Yiqiang Su & Joseph Geunes, 2012, ‘Price Promotions, Operations Cost, and Profit in a Two-stage Supply Chain’, Omega, Volume 40, Issue 6, Pages 891-905
5. Katy Askew 2012, Talking shop: Is Wal-Mart’s EDLP focus enough to drive sustained growth?, Just Food, viewed 23 March 2014, <http://www.just-food.com/analysis/is-wal-marts-edlp-focus-enough-to-drive-sustained-growth_id120198.aspx>
6. Sean Deale 2012, Why So Many Retailers are Claiming EDLP, Retailnetgroup, viewed 23 March 2014, <http://www.instoretrends.com/index.php/2012/03/29/price-transparency-retailers-move-strategy-edlp-pricing/>
7. All Business, Business Definition for: every day low pricing (EDLP), All Business, viewed 24 March 2014, , <http://www.allbusiness.com/glossaries/every-day-low-pricing-edlp/4966282-1.html>
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