Client Overview

Industry:
Hardware, DIY, and Trade Building Supplies Retailer

Business Size:
80+ independently owned stores, ~$1.3B in annual revenue

Location:
Nationwide coverage across New Zealand with consumer and trade-facing operations

Client Context:
Mitre 10 New Zealand operates as a cooperative group with a strong level of local market autonomy. While stores serve both retail consumers and trade professionals, inconsistent pricing methods, outdated systems, and a lack of national pricing governance have resulted in significant margin leakage, operational inefficiencies, and reputational inconsistencies in pricing.

Client Feedback:
“We now know where we’re leaking margin—and we’re finally doing something about it. It’s not about raising prices blindly, it’s about setting the right price and giving our team the confidence to stick to it.” – Commercial Director, Mitre 10 New Zealand

Challenge / Problem

Symptoms Observed:

• Cost-plus pricing logic dominates across many categories, particularly in trade-focused SKUs
• Inconsistent execution of markdowns and promotional discounts across stores
• National and local price misalignment causing confusion and margin erosion
• Poor pricing visibility at store level—teams lack confidence and tools to defend or explain pricing
• Rebate structures and supplier price increases poorly tracked and not always passed through in a timely way

Strategic Impact:

• Stores absorbing price increases, leading to below-cost sales in high-volume products like timber, plumbing, and hardware
• Lost EBIT across discretionary and project-based purchases due to discounting defaults
• Customer perception of inconsistent pricing eroding trust—especially among trade accounts
• Limited ability to run national pricing strategies due to fragmented capabilities and system constraints

Internal Commentary
“Our pricing is a mix of what the supplier recommends, what the system spits out, and what the local manager thinks will keep the customer from walking. It’s not strategic—it’s reactive.”

Objectives of the Engagement

• Benchmark current pricing capabilities across all 9 pillars of pricing strategy and operations
• Surface key drivers of margin loss at product, customer, and store level
• Establish alignment on a clear pricing ambition—shifting from cost-plus to value-based pricing where possible
• Build confidence and capability to execute price increases, manage markdowns, and defend deals in a structured way
• Equip store teams and the head office with training, tools, and governance to support pricing performance

Our Approach

Phase 1: Capability Diagnostic

• 132 staff members completed Pricing Insight’s diagnostic assessment
• Average pricing capability score: 62%
• Fewer than 10% of participants passed the pricing maths test (only 3 achieved a perfect score)
• Significant variation identified in views on pricing authority, discount practices, and promotional ROI

Phase 2: Strategic Workshop

• Conducted pricing workshops with national leadership and store operators
• Mapped challenges in override behaviour, customer pricing inconsistency, and product misclassification
• Developed alignment around moving from legacy pricing culture to structured governance and value communication

Phase 3: Execution Toolkit

• Delivered playbooks and SOPs for price setting, override thresholds, discount approvals, and margin analysis
• Designed margin dashboards and analytics frameworks for store-level visibility
• Initiated a national price architecture project across key categories (timber, seasonal, garden, plumbing)

Key Actions Taken

1. Discount & Markdown Governance
   Introduced rules-based discounting model with approval matrix and markdown logic based on inventory age and seasonal role
2. Value-Based Pricing Playbook
   Created category-specific pricing guidance to shift from cost-plus to value-linked logic
3. Systems & Data Improvement Plan
   Scoped system upgrades to improve product hierarchy, pricing workflows, and rebate reconciliation
4. Pricing Capability Training
   Delivered sessions on price maths, price psychology, and trade negotiation tactics
5. Store Engagement & Margin Tools
   Developed branch-level dashboards for margin leakage alerts and promotional effectiveness tracking

Results Achieved (Within 12 Weeks)

1. EBIT Margin Recovery Opportunity
   Identified over $10M in potential margin gains across SKUs and stores
2. Discount Culture Shift
   Forecasted 50% drop in manual overrides through structured discounting model
3. Price Increase Execution Support
   Deployed playbooks enabling confident supplier pass-through execution at store level
4. Capability Uplift & Alignment
   Boosted confidence and consistency among store managers and commercial teams
5. National–Local Strategy Integration
   Developed governance to balance store autonomy with pricing discipline

What This Means for Similar Companies

‍Retail and trade hardware chains with local autonomy often struggle with aligning pricing, maintaining discount discipline, and overcoming system fragmentation. Mitre 10’s journey demonstrates how even in a decentralised model, structure, data, and training can unlock millions in lost margin—without damaging customer loyalty.

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