Chapter 7. Implementing Cost-, Differentiation-, and Value-Based Retail Strategies

Cost-Based Strategies

There are three overall types of cost-saving opportunities. The first form deals with obtaining better prices due to high bargaining power. In general, large retailers with centralized purchasing organizations or that concentrate their overall purchases in a small number of SKUs are best able to secure the lowest prices. Retailers with strong private label brands are also able to use these as means of negotiating better prices for manufacturer-branded merchandise.

A second form of cost-based strategy is through a retailer’s reducing bad costs. Some bad costs are incurred by chains that overly centralize strategies across the United States, ...

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