One of the most important things we have learned about pricing is that most dealers allow the implementation process dictate how they will approach their pricing. For example, many stores periodically review pricing by department or merchandise class making individual pricing decisions based on a gut feeling. The department or class under review was perhaps chosen simply because it was next in line.
With Margin Master, because it is so simple to review great numbers of Skus, and apply consistent logic through your Pricing Strategy, it is important that we understand the distinction between Pricing and Implementation.
Pricing is the act of reviewing Skus and making decisions about those Skus pricing. Implementation is simply the process of taking your new pricing, and making them active. Different stores have different activation procedures, but whatever steps are necessary to implement a change - this is the implementation phase.
When first getting started with Margin Master, it is important that we do not tackle the pricing issue in a system driven by implementation. A good start to the review process with Margin Master is to work with as many Skus as possible. For Example - what is the general rule for every item in your store? Is it tied to a particular price level or some other indicator? Using Margin Master, we can quickly identify and resolve all of our pricing issues across one or more stores. For these problem Skus we quickly identify, it is truly irrelevant what department or class they are in. They are simply problems - and we need to fix them all.




The chart above shows the relationship between Pricing Strategy Design and Implementation. The reality with Margin Master is that the Design and Strategy part takes a relatively short amount of time. The bulk of the real work to be done is during the implementation phase.

Making an Implementation Plan
Let's assume that we have effectively used Margin Master, designed a Pricing Strategy that works for our store, and we are now ready to get started with the implementation phase. If after creating and applying our new pricing strategy we see that we have 10,000 items that are changing price - this certainly dictates a different implementation strategy than if we only have 500 changes to do.

Every store needs to determine its weekly change capacity. This is the number of changes that can be fully implemented and activated by your staff in accordance with your requirements. If using the example above we have 10,000 changes to do, I can make an effective Implementation Plan knowing that I am capable of doing 2,500 changes per week.

There are other factors that might weigh in on your implementation schedule. Things such as selling season, employees willingness to work overtime, your desire to get changes activated, and business flow all will change your potential number of changes per week - and therefore effect your implementation schedule. The key piece to making any schedule is knowing how many changes need to be done. If we know we need to do 10,000, we can plan accordingly. If we work by department, we will ultimately get the same changes done, be we are implementing changes because of the wrong indicators. Most department/class/aisle pricing strategies simply take way too long to get done. Every day that goes by without having the changes done is costing you money.

Implementation Strategies
If we again assume we know our two key indicators - the number of changes needed, and how many we can do per week - we can start to plan an intelligent implementation strategy. The reality in all stores is that a small percentage of items make up a larger percentage of sales. Likewise there are many items that do not sell at all! Does it make sense to spend time working on changing the slow or non-moving Skus?

ABCD Implementation Strategy
The ABCD Implementation Strategy is driven by our store velocity codes. The Implementation strategy simply states - lets do the A items first - then the B's - then C's, D's and finally the Z's or X's. Using this strategy - stores can quickly start to realize the improved bottom line, and aggressively attack the Sku's that deserve the most attention.

Impact Implementation Strategy
The Impact Implementation Strategy would specify that the items with the largest impact be done first. A common approach - typically when first getting started would be to do the top 1000 impact Sku's - then perhaps change strategies to the ABCD approach

"Get It Done" Implementation Strategy
Often met with resistance - this is the strategy I always recommend as the best solution. Often, it is very hard to convince dealers to commit to the "extra effort" or "extra costs" associated with this strategy. This Implementation Strategy simply says - get all changes done ASAP - even if we have to make other sacrifices to do so. Working overtime, hiring temporary workers, and night shifts are just a few of the extra steps possible when getting it done is truly the priority.

Another consideration of the strategy is there is still some logical sequence of implementing the changes. If the majority of items are changing, changes can be done quickest if they are sorted by location code or shelf sequence number. If this isn't available - then a department - class sort order will speed things up as well.