Identifying Price Elasticities to Drive Greater Margins

Challenge

As part of a comprehensive business review, the retailer identified the need to focus on product categories offering opportunities for margin improvement. Using PULSE, they analyzed historical sales and margin data to assess how sensitive certain products were to price changes.

Solution

One product, a popular personal care item, was found to be price-insensitive and not a major sales driver in the store. Based on this insight, it was recommended to implement a modest 4% price increase and carefully monitor any effects on sales volume.

Results

The result was a clear margin improvement without any decline in sales. Over the course of a year, this approach helped the retailer increase weekly margin by an average of €187, totaling more than €10,500 in additional margin annually—demonstrating the value of data-driven pricing decisions.