There are two pricing schemes that can work to own Price as a driver of traffic - Sales & Discounts and Everyday Low Pricing.
Sales & Discounts is when you constantly have some type of sale or coupon or promotion going on. The tricky part of this is actually making your sales and discounts be worth something. Before the Internet, the simple perception of a sale or discount was enough to draw traffic. But today's smartphone-savvy shoppers will call you out if all you do is jack up your prices and then offer a discount off that inflated and unrealistic price.
The other downside to Sales & Discounts is that you have to constantly be ramping up the hype machine in your advertising and marketing. Or you have to be sending out coupons and mailers enticing people to stop in.
Everyday Low Pricing is quite different. Instead of the gimmicks, sales and coupons, you simply lower your prices below everyone else and keep them there. It is certainly more trustworthy. It is also easier for customers to check to see if you truly are low price. The hype is gone, but if you do have the best prices, you will get the traffic and sales.
The Internet makes this driver quite difficult for most independents to compete. Pretty much almost everything you sell can be found online, and most often for less. Unless you only sell items that are strictly protected with Minimum Ad Price (MAP) policies, it is almost impossible to own this driver.
Also remember that you will be competing directly with major chains like Wal-Mart and Target who have three distinct advantages over you.
- Lower overhead through amazing operating efficiencies
- Bullying power to get better prices and rebates from vendors
- Billions of dollars in advertising
Of all the drivers, this one is the least favorable for indie retailers and I wouldn't recommend it as a strategy.
You still have to have prices that are attractive, however. Price may only be one of five factors that drives traffic, but it is still one of the biggest factors in driving actual purchases.
Check out this free download - Pricing for Profit - that will show you how to make your prices attractive in a price-sensitive retail climate.
PS If you do have a price advantage, you have two choices. Shout it to the world, or raise your prices and start pocketing the difference. My dad always said we should never be below our competitors' prices. No one thinks of us as low price, so if we're below them, we're just leaving money on the table.