BIRA: Use known value items to influence pricing strategy
The British Independent Retailers Association said price rises represented a “real problem” for shops this year.
“As well as supply chain inflation we are seeing other overheads such as energy and labour increase significantly,” said chief executive Andrew Goodacre.
“Retailers will have to pass on some of these costs but there is only so much the consumer will pay, especially as shoppers are also facing an economic challenge.”
He encouraged retailers to use small, regular increases to prices rather than passing on the occasional hikes they receive from contracted suppliers in one hit.
“Be aware of known value items (KVIs),” added Goodacre. “These are often the more popular items sold and are often used as a benchmark in the eyes of customers.
“For supermarkets, these items are milk and bread, which is why you will see little inflation on these products.”
He conceded that it was harder for independent retailers to identify clear KVIs but said they needed to do their homework to create a pricing strategy that “reflects increased costs while still looking like good value to the customers”.
Goodacre added that the level of inflation expected this year was higher than that which many retailers will have ever experienced.