CASE ANALYSIS: RANDALL DEPARTMENTAL STORES

Group 3 Section Y PrernaKatyal | u112097 MonishaNavlani | u112146 Neelam Agarwal | u112148 NehaMangal | u112149 VineetBhat | u112180

PM Case- Randall Departmental Stores | Group 3 | Section Y

1. Why was it so important for Randall to switch to EDLP from HI-Lo for specific product groups?

PM Case- Randall Departmental Stores | Group 3 | Section Y

2. The retail store changed the pricing structure from Hi-Lo to EDLP for three product groups, viz., Fashion Jewellery, Men's Suits and Children Clothing. Did this succeed? What was the reason for the success? Different sale events for different departments and non-uniform pricing throughout the year was creating confusion in the minds of customers. They started to expect heavy discounts in departments where EDLP was introduced because Randall had been offering heavy promotions in other departments at various points in the year in the form of Extra Value days and discount coupons. Uniform or stable pricing throughout the year seems to be an overall good option for Randall. (a) Fashion Jewellery EDLP is unsuccessful 1. It is difficult to judge the quality by the customer. So price is considered as an indicator of quality. Whereas EDLP reduces the perceived utility by the buyer. Hence, if it is priced high and given a better discount, the customer perceives it to be a better bargain. 2. There is steady decline in fine jewellery from 28% to 22% (b) Men's Suits - EDLP is unsuccessful 1. EDLP did not help in clearing existing inventory which was considerable as Suits are Fashionable goods and need end of season clearance. 2. The Buyer was a bargain hunter and was confused by different prising between Suits and Shirt. 3. Even though EDLP improved the day-to-day sales, the business dropped relative to the sales period. The customers were doubtful about the EDLP at Randalls. Also, they had trouble in understanding the pricing system. (c) Children Clothing- EDLP is successful 1. Net Advertising expense as a percentage of sales was the lowest (1.3%) for Childrens apparel compared to other departments where EDLP was not implemented. 2. EDLP has also helped in clearing the stock. The inventory turns in this segment is driven mostly by EDLP policy 3. Consumers are aware of the EDLP and it is well communicated to them. The competitors also follow the same pricing policy.

PM Case- Randall Departmental Stores | Group 3 | Section Y

3. From your understanding of question 2, what do you think is the requirement for a good pricing strategy (either EDLP or HI-Lo) for a store?

PM Case- Randall Departmental Stores | Group 3 | Section Y

4. So, from your analysis of question 3 what are the options for Randall's. a. Continue with EDLP? b. Lump it--> i.e. have no other option but to continue with a highly promotional pricing. c. Any other strategy?