The goal is to make it easy for the retailer to keep price as consistently low as possible for customers. Retailers who insist on EDLP are implying that they are not interested in receiving promotional allowances. Under EDLP, the manufacturer may be responsible for advertising, which eliminates the need to pay special promotional allowances to the retailer. When it is used, it is found primarily on price-sensitive commodities such as staples. The EDLP concept is seen by some retailers as having a positive impact on private-label sales.
Retailers tend to combine the two strategies to profit from the best of both.
A Study of the Competitiveness of Distribution Channels in Canada , Toronto, National Task Force on Cross-Border Shopping, March 1992. Essentially, rebates reduce the purchase price of the goods and increase the gross margin available to distributors and retailers. There are many types of rebates. During the past several years, traditional grocery stores have seen increased competition from new format outlets such as Wal-Mart, Price Club and Costco, all of which rely on bulk buying and efficient business practices to offer lower prices than those in traditional retail businesses. Implementing ECR will enhance competitiveness throughout the grocery supply chain.