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· Posted on
February 21, 2024

KMD Brands is riding the billion-dollar wave... but it's finally time to shift away from 80% discounts on puffers

KMD Brands recorded a 12.6% growth in revenue over the last 12 months.

What's the key learning?

  • KMD reckons it's got a new secret sauce for the Kathmandu brand specifically: they've slowly been shifting away from a "high-low" pricing strategy.
  • A high-low pricing strategy is when you set prices higher than your competitors but promote frequent sales and discounts.
  • This discount strategy can drive a significant amount of volume when you're on discount, but can also eat into your profit margins if its not managed well.

👉 Background: KMD Brands owns some of the seriously iconic Australian brands like Kathmandu and Rip Curl... as well the lesser known US boots brand Oboz.

👉 What happened: Despite the shaky economy, KMD Brands recorded a 12.6% growth in revenue over the last 12 months. And this led them to hit $1 billion AUD of revenue for the very first time. Now KMD reckons it's got a new secret sauce for the Kathmandu brand specifically.

👉 What else: They've slowly been shifting away from a "high-low" pricing strategy. And as a result, Kathmandu's margins improved from 4.7% to 7.9%.

What's the key learning?

💡A high-low pricing strategy is when you set prices higher than your competitors but promote frequent sales and discounts.

💡This discount strategy can drive a significant amount of volume when you're on discount, but can also eat into your profit margins if its not managed well. The biggest problem? It can become quite addictive for retailers who constantly want that 'sugar hit'.

💡While Kathmandu's new, consistent pricing strategy will lead to more stable profit margins... it definitely won't create the same sense of urgency for purchases.

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