Local Price, Not So Nice?

Seeing new customer price sensitivity, retailers of all stripes are considering the potential of localized pricing strategies, something, of course, c-store operators have been doing for years at the gas pump.

According to a survey of retailers by RSR Research taken last fall, in the midst of the country's economic meltdown, a renewed interest in localized merchandise pricing is spurring renewed interest in retail technologies that would support that strategy.

But beyond the internal and information technology challenges -- what does "local" mean, anyway? By store, by neighborhood, by zip code, by demographic makeup? The question remains: Do customers really want to pay different prices for the same merchandise, at one chain's stores? How would they feel paying $4.49 for a sandwich at the store closest to home, but $4 for the sandwich in a store next to their office?

We see this to a degree at fast feeders. Happy Meals in Manhattan carry a much heftier price tag than those picked up in New Rochelle, N.Y., which is 25 minutes away. Considering the cost of doing business in New York City, it's understandable.

But if c-stores started selling merchandise at localized prices, would it ultimately help them price more competitively in some areas, while making a few cents more margin on the same products where they could get away with it? Can promotions be used to accomplish this without confusing or upsetting your loyal customers who may frequent more than one store?