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Ring In the New Year With an Important Resolution

Userby Deputy Dan

New Year's is notorious. It brings to mind celebrations, resolutions, and shedding the old to ring in the new. For retailers, this manifests itself in clearance sales, deep discounts, and inventory reduction.

Before you can even say, "After-Christmas Sale," spring/summer products are out on the shelves and online. In fact, just a couple of weeks ago, I was in a major retailer trying to finish up some last-minute Christmas shopping, and I passed a rack of merchandise that said, "Think Spring," with images of bunnies and flowers. Santa hadn't even loaded his sleigh yet.

Clearing Out the Old

None of this is surprising really, given retailers know all too well that it's critical to move the remaining fall/winter items out of inventory as fast as possible to make room for new merchandise that will soon be in demand. To do so, they engage in extreme discounting, with prices dropping faster the longer the inventory remains.

Making matters worse, managing inventory has been particularly difficult for retailers since COVID-19. Dealing with changes in consumer behavior, coupled with extensive supply chain problems, the rules of the game definitely have changed for distributors trying to manage supply and demand fluctuations. Going into this year's holiday shopping season alone, retailers were up an estimated 17% in inventory. Some of these resellers have purposely overstocked their merchandise for fear of additional supply chain problems, only to find themselves with surplus inventory issues down the road.

The Marketplace Gets Trickier

Moreover, with economic uncertainty continuing – will there or won't there be an actual recession — and inflation still squeezing wallets across the nation, retailers are only right to be concerned with moving inventory.  In fact, despite some hope for 2022's holiday shopping season and an actual small increase year-over-year, anticipated retail sales dropped .6% in November and online sales dropped even bigger than expected at .9%. While December's figures will soon be out, the message seems clear that shoppers, strapped with economic concerns and higher prices, were not spending as much or buying as many gifts this holiday season as originally anticipated.

Most retailers are expected to adjust their plans based on these market fluctuations and understandably so. However, this "move it or lose it" clearance mentality among retailers can cause a lot of headaches for manufacturers who engage in a Minimum Advertised Pricing (MAP) strategy. During even the most peak of shopping seasons, producers with MAP face the uphill battle of monitoring online retailers to ensure they are not dropping prices below their set minimum prices. But add in the transition of seasons and more economic question marks, retailers are expected to engage in even more discount strategies for the time being.

Ringing In the New

Certainly, some manufacturers decide to remove MAP on specific products when they want to bring out a new model or make room for their newest creations. In these limited cases, it makes sense to clear out and price as needed. However, some e-tailers take this as carte blanche to violate MAP on other products that are not excluded from MAP. It's hard to put that horse back in the barn once it's taken off. Removing MAP can invite months of additional MAP violations and pricing problems. As such, this strategy should be used cautiously.

So with the new year that finds old inventory discounted and retailers continually responding to an ever-changing marketplace, what can manufacturers do to protect their brand integrity, value, pricing, and revenue? It's time to set those New Year's resolutions and mean it. The surest way to protect your brand from retailers willing to win a buy box at all costs is to:

  • Have a clearly set MAP policy that is communicated regularly and well with resellers
  • Enforce your MAP policy without fail or delay
  • Monitor your MAP in the marketplace, 24/7

Best practices show that having a solid policy that is highly enforced on a timely basis is critical to minimizing MAP violations and protecting your brand's value.

Get Resolute With MAP

Monitoring your prices 24/7, responding quickly and firmly to violations, and ensuring both your unauthorized and authorized sellers understand you mean business when it comes to your MAP policy does not have to be difficult or cumbersome. In fact, it's a far easier resolution than the traditional ones we make as individuals, like better diet and more exercise. MAPCOP has you covered (diet and exercise excluded!).

Using a MAP monitoring service like MAPCOP is easy, affordable, and works 24/7 to identify your online pricing violations. With a few simple clicks, you can easily monitor your pricing. If you want to see for yourself, take advantage of MAPCOP's free trial — zero obligation, no credit card required for trial, and intuitive to use.

Start the new year off right. Contact us today to start your free trial of MAPCOP. Happy New Year!

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