EDLP vs. High/Low Pricing

There are two pricing strategies that dominate today’s retail market, and they are EDLP and High/Low. Many retailers use an everyday low pricing strategy (EDLP). This strategy sets the retail prices at a level between the regular nonsale price and the deep-discount sale price of the retailer’s competitors. Although they may not always be the absolute lowest price, they have consistently low prices. A wholesale club or a sale price at a competing store may have a lower price on an item. Wal-Mart, Home Depot, Save-a-Lot and Aldi all use everyday low pricing as their strategy. Many of the eBay online stores have adopted this strategy as well.

High/Low pricing is the second most common type of pricing strategy. With this strategy, the retailers have prices that are sometimes above their competitors who use EDLP. However, they use advertising to promote frequent sales. The sales from these retailers have become more intense as time goes by. In the past, retailers only marked items down at the end of the season or when items were overstocked, or their vendors offered them special deals. Today, retailers deal with increased competition and value-conscious customers by having more regular sales. Examples of high/low pricing strategy use would be Khol’s, Meijer, Family Fare, D&W, and many others.

I personally like Wal-Mart’s use of EDLP. It has helped them to become the market leader in every market that they enter, and become the largest retailer in the world. It’s nice to know that on almost everything I need, I can find it at a good price at Wal-Mart. Sometimes I just don’t have the time or energy to shop around and watch all of the sales out there. To deal with this, I just shop at Wal-Mart to avoid the hassle of going from store to store. I am still selective about what I buy there. Usually I stick to the basics such as toiletries, since it is hard to beat their prices on those everyday use items. It seems like some of their produce and other foods are not always as fresh as Family Fare’s or D&W’s.

I like to shop at stores where my money goes a long way. I used to shop at Family Fare for almost everything that I needed, but then I decided to try Aldi for my groceries. I found that I like some of Aldi’s products better than the name brand ones. In addition, I saved a lot of money on my grocery bills. When you consider how often you shop for these items, you are talking a lot of money in the long-run. Anything I didn’t like at Aldi I would go to Family Fare or some other store for.

When I’m at a store that uses high/low pricing, I usually always go for the sales or clearance items anyway. For example, when I shop for clothes I go straight to the clearance racks of my favorite stores. If I don’t see anything I like, I don’t buy anything. I basically have all of the clothes I need, and only buy new things to update my wardrobe. Since I don’t buy trendy clothes, they last me a long time. I don’t pay the full-price for the items I see in the front of the store, I just wait a few months and pay 1/3 of the price later!

All-in-all, I’m a big fan of EDLP since I can always count on a low price.