How Retailers Can Appeal to Lower-Income Shoppers

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This article originally appeared in Harvard Business Review on November 21, 2011

Retailers face several challenges as they enter the 2011 holiday season. Unemployment remains high. Gas prices have risen 90% from 2008 to 2010, leaving consumers with $160 billion less spending money per year.

Many retailers are responding with across-the-board price promotion strategies. This is problematic, because not all shoppers are equally price sensitive across all categories. The Cambridge Group conducted a Pricing Power Study across 124 everyday consumable categories using Nielsen data from 2008 to 2010. Our findings suggest that a more precise strategy that carefully raises and lowers prices for the right shoppers in the right categories can drive profitable growth for the retailer and the category overall.


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