Menu
For a building materials company in a very competitive retail market, the cost price of its products is approximately 60-70% as determined by the purchase price of steel. The steel market is very volatile with lengthy delivery times, variable availability and responds strongly to the price of oil and raw materials. Purchase prices fluctuate by several percentages. Purchase contracts can usually only be entered into on a quarterly basis. Common sense in the market meant that retail prices would have to adapt accordingly in order to preserve margins.
Securing the development of a healthy margin in a shrinking retail market.
My vision is that with every price change (drop or rise), a customer will feel deeply motivated to consider whether they are still using the right supplier for their products. This means that as a retailer you are always obliged to discuss or defend your pricing policy.
As the one ultimately responsible for this company, I have decided to keep retail prices stable as of the next quarter, and no longer allow them to fluctuate along with the changing purchase price of steel.
We did not lose any volume of business, but there was (temporarily) extra pressure on our margins, which was recouped in full later in the year. In the meantime, we successfully adapted our commercial message to customers by asserting that we are the only stable, loyal and reliable party in the market, irrespective of the developments in the steel market.
For this we used a range wherein the steel prices were able to move without us having to adjust the retail prices. This reassured the market, and our salespeople were able to focus their attention on selling our value-added services and our USPs.
This stable retail price strategy in combination with a competitive purchasing policy has ensured that our operational result has grown by double-digit percentages year on year.
Bouwen aan slagvaardige organisaties met betrokken medewerkers.
+31 6 50 51 05 76
joris@imjoris.eu
site by Daan & Wim van opwolken.com