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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