Retail Strategy Secret #2: EDLP Pricing

Every Day Low Prices (EDLP)

Welcome to the second post in our series of “Retail Strategy Secrets”!  Here you will learn the angles, approaches, and tactics retailers are using every day to try and separate you from your hard-earned cash.  Understanding these unlocks the door to spotting great deals, and you never want to pass up a Dealicacy…

EDLP

EDLP stands for “Every Day Low Pricing,” a model that consistently features items at average to lower-than-average pricing. Most notable about EDLP is that items seldom, if ever, go on sale.

For the most part, retailers following EDLP will tend to advertise categories of items, featuring those who list at a price comparable or better than what can be found elsewhere.

Commonly found in … superstores such as Wal-Mart, grocery stores, and many wholesale clubs like Costco, the promise to the consumer is overall savings.  Not on select individual items as seen in “Hi-Lo” strategies, but rather across the overall total of purchased items.

When walking into certain grocery stores (and sometimes right at the checkout lanes as well), have you ever noticed the cart full of items and a sign with a handwritten price on it?  No, the store isn’t being lazy by not putting away an abandoned basket.  Rather, it is touting the value of their EDLP strategy compared to what you would find with a competitor.  “This assortment of groceries cost $100 here, but would have cost your family $120 at the grocery store across the street.”

EDLP caters toward consumers who place more of a premium on their time.  Especially time spent shopping. They are less able (or simply less willing) to bounce from store to store to capitalize on multiple deals or comparison shop. Such consumers are more content to get all errands done at once and know they have achieved a reasonable total price.

So you are more likely to save at Wal-Mart or Costco?  It really is difficult to say, and has to be answered in the bigger picture with repeat buying habits.  If you buy from EDLP merchants on a daily basis, for everything, you are probably getting a good and fair price. Especially factoring in convenience and time savings.

However, a strictly EDLP customer is hardly getting the best deals, and could probably save more in the long run by adjusting their approach.  Here are some tips to doing better than settling with EDLP:

  • Many EDLP retailers do no accept manufacturer coupons. Sam’s Club is a good example of this.
  • Also, many EDLPs do not participate in nation-wide product/brand promotions.  Not to single out Sam’s Club, but they have another great example: Goodyear tires are the price they are.  Promotions (if any) differ than offered elsewhere across the country, and Goodyear EMPLOYEES are even recommended to shop elsewhere so they can get the full value of their employee discount.
  • Looking for food items to put out at your next party?  If you are close to a major holiday or sporting event, don’t look for potato chips and soda-pop at an EDLP retailer.  The promotions aren’t nearly as good as you will find elsewhere.

Up next, “Hybrid” strategy.  Don’t miss out!

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