12 | Orgill Case Study Pricing Adjustments While the store’s inventory and assortments offered room for immediate improvement, there were also immediate opportunities to adjust pricing to levels appropriate for the market and the level of competition. However, the team realized that pricing adjustments would have to be measured and introduced in a way that wouldn’t overwhelm the staff at Germantown Hardware or cause alarm among the store’s customers. “We knew as we were changing out some vendors and implementing new assortments that pricing changes would come along with the implementation,” Helms says. “But when we looked at the store’s existing pricing, we also saw that nothing had really been adjusted in years, so we knew, like the inventory, this was an immediate opportunity for us.” The Germantown Hardware transition team decided to implement price changes on a rolling basis, so instead of simply repricing all inventory on the shelves, updated pricing would be implemented as new merchandise or assortments were being brought in. This new pricing would be based on data from both CNRG and Orgill. CNRG uses a sophisticated variable pricing methodology, based on Orgill’s Market Driven Pricing model. This model utilizes real-world market data to set prices based on a range of variables, including product sales velocity, competitive position, whether items are blind or highly price sensitive. Typically, stores implementing a variable pricing model, like the one used at CNRG brands, see their margins increase while also being able to establish a more price-competitive position within their market. And, by implementing the price changes on a rolling basis as new assortments were implemented and set, neither Germantown Hardware’s customers or staff would be overwhelmed with price changes. “By doing all the updates as rolling changes, customers would be less likely to notice any changes,” Helms adds. “There were some areas where we did have to make immediate changes just so we wouldn’t be upside down, or where we might have been leaving way too much margin on the table, and we made these. We just wanted to get to a point where we stabilized ourselves on pricing and then could continue to make changes throughout the remodel and reset.” Before - Fasteners After - Fasteners
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