The 7 Challenges of Modern Competitive Pricing
Wrong Measures and Incentives
A major internal challenge for the retailer can be its organizational design and HR support. People are fundamentally motivated based on how they are rewarded. However, merchants and pricing departments may be measured against completely different success criteria that are working against each other. For example, when Pricing strives to maintain a company’s value proposition by driving towards a CPI index, this may run counter to the gross profit targets set by merchants. Progressive merchant leaders, with the support of HR, need to bring these departments together with aligned KPIs and metrics. Driving EBITDA should be everyone’s goal. Organizational structures and compensation schemes should encourage productive and aligned behaviors.
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