Price Attack

Have you ever wondered why you see prices listed as RRP – recommended retail price?

Under law, a manufacturer can set a wholesale price for distributors and franchisees and may make a recommendation on a retail price but cannot make that price mandatory for retailers.

So Queensland skincare manufacturer Jurlique has found out to the potential cost of up to $10 million.

According to this Courier Mail report, the Australian Competition and Consumer Commission contends that the company dictated retail prices to its franchises and refused to supply to retailers that discounted their products.

This story perfectly illustrates the need for regular communication between wholesalers and their retail distributors.

Selling too cheaply impacts on the quality and value perception of the product. Price too high eats into sales, however discounting reduces profits and may cause the retailer to resent the wholesaler.

It is important for business relationships that both parties receive a worthwhile return on investment so it is important for both the wholesalers and retailers to analyse sales figures.

If stock is not selling well take a look at the reasons why. Is it price? Is it the quality of the product? Are other economic factors involved?

Rather than discounting a product, it is always worth looking at a simply value-add. It keeps the value integrity in place but also helps shift slow moving items.