Google Adwords and competitive pricing: New to retail

[justanemployee]

Hi! I'm new to the forum and I don't even own a business but I'm looking for some advice for the retail store that I basically manage (my boss has most of the decision power but is never here). First of all his prices are high to say the least. I know you can never compete with amazon but he tells me to just double the cost of every item accross the board to price it regardless of SRP, popularity or other considerations. Is this normal? What is a potentially better strategy? My idea was pricing popular heavy items higher to subsidize lower prices on lighter impulse-type items. Also, the only advertising he does is google adwords. I know this is cutting edge but I feel like this will also cause the google algorithm to display what we sell from other online retailers cheaper. There is only one brick and mortar competing in the whole state so the main competition has to be online.

I wouldn't be posting if it the business was doing well. Its been super slow for a long time. I try my best to sell sell sell but you can't sell what people can't afford and can't sell to people who don't walk through the door. I'm really new to retail but since I'm here and he isn't I hear what the customers say about want from the place. I really like working here and feel a sense of responsibility since I am the only one here most of the time. Looking to maybe start a business myself in the future and want better methods.

Sorry if this is a rehashed topic. Also bored cause its really gdam slow.

[vangogh]

Welcome to the forum justanemployee. No need to own a business to ask questions. You do sound like someone who would like to eventually own one given your interest in improving your boss' business.

You're right that you can't compete with Amazon (or any large retailer) on price, however arbitrarily doubling prices doesn't make sense to me. I think smaller businesses generally need to charge more, but they also have to figure out a way to justify the increase. You do that by adding some kind of value for the customer. For example say we're talking about some technical product. Amazon will ship it to you and then you're on your own for setting it up and using it. A smaller store could charge more because they walk the customer through the set up or even offer to install it for them. That adds value some customers will be willing to pay extra for. That's just one example. You have to think about the specific products you're selling and identify something customers aren't getting with the product. Then you give them that something and charge more than the big retailer.

There's no one strategy though. It'll depend on what your boss sells, what potential markets exist for those products, what the people in those markets want/need. In general think of it as finding some kind of additional value you can give to a group of people who'll be willing to pay extra for whatever it is you do extra.

Believe it or not a lot of those impulse buys are actually where retails stores make the most money. A lot of stores will charge less on the popular item to get people into the store and then make their money on the impulse buy which has much higher margins. I used to work in a large bookstore chain. The store made next to nothing on bestsellers, but those brought people into the store. Where they made a lot of money was on those $2 and $4 hardcovers near the register. They'd get them for pennies because it publishers needed to unload them. Another example is all the carriers giving away top of the line smartphones to get people into the store to sign them up for the service. Your idea is sound, but you have to think which item does the store make the most profit from selling and which are the items that can get people into the store.

AdWords can be a good way to get traffic, but you have to know what you're doing with it. If all your boss has done is set a few ads and a budget and never looks at it again, he's losing out. AdWords is something you pay attention to and tweak over time. There's a bit to learn, but the information is out there. If you're the only brick and mortar store in the area though, I'd work on ways to get people into the store. Again, it depends on the products you sell, but there's likely things you can offer people for free to get them into the store. People may not travel across the state if they can order the same thing online, but people in the immediate are likely will if you can give them a reason to come in.

Hope that helps.