December 18, 2022

How This Company Is Managing Price Increases

When you look at the average price per item purchased by merchandise class, you see interesting things. Look at this brand:

This table is full of interesting findings. Look at old items. Old items are considerably cheaper in 2022 than are items from other classes ... though prices have generally increased on the items that remain.

Look at the diagonal ... the cells represent the price of items introduced that year. In 2020 new items averaged $30.11 ... in 2021 new items averaged $38.04 ... in 2022 new items averaged $45.29. Each year new items are introduced at ever-higher prices.

Read across each row ... this brand increases prices on the items that remain as time passes, or the brand discontinues low-priced items.

This dynamic creates all sorts of odd customer-based outcomes. Customers looking for lower prices either wait for discounts/promotions, or customers gravitate to items that are cheaper (i.e. the older items). These dynamics make new items appear unattractive according to company reporting, pushing continuance of older items, which hurts the future of the brand.

These dynamics are happening everywhere in late 2022, and the dynamics are problematic.

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I See Dead People

From LinkedIn, where I wrote this on Sunday: