Pricing strategy of food retailers in a volatile, multicurrency and inflationary environment

Abstract

Management faces a strategic pricing dilemma to remain competitive and survive in an uncertain environment. Uncertainty is prevalent all over the globe. The study used the Zimbabwean context with hyperinflation, volatile exchange rates and multicurrency. The research objective was to assist management in volatile, uncertain environments with a guide on factors to consider in strategic pricing. The researcher undertook a qualitative study by conducting twelve semistructured interviews. The researcher used thematic analysis to get themes derived from codes through ATLAS.ti. The most prevalent theme amongst the respondents was market assessment, including codes like competition, buying behaviour and disposable income. In addition to hyperinflation, volatile exchange rates and multicurrency, the study found that competition, customers and costs are factors to consider in strategic pricing in the food retail sector under uncertainty in Zimbabwe. The food retail sector became more attractive during the economic downturn in Zimbabwe because consumers spent more on essentials. The study highlights different types of pricing strategies. The study results revealed that volatile exchange rates and hyperinflation should be considered in the same light when assessing factors in strategic pricing in an uncertain environment. There is bi-directional causality between hyperinflation and volatile exchange rates. Management’s attempts to curb uncertainty risk by doing speculative activities further exacerbated hyperinflation and uncertainty. Speculation and discretion were applied by management during decision-making in a volatile and uncertain environment. Leadership requires a stable base currency and engagement with suppliers for lower fixed prices to achieve strategic pricing sustainability. Cost containment contains the overall price increase. Management flexibility, quick decision-making, and integrity came out as learnings for top management in uncertain and volatile environments