A step-by-step guide to optimize your pricing strategy

BROSS-2

June 26, 2019

uxdesign

Today’s grocery retailers face many challenges when it comes to optimizing pricing strategies–namely, keeping up with digital-savvy retailers and the evolving expectations of equally savvy consumers. To help retailers stay ahead of the curve, I want to share the important steps you need to take in order to optimize your retail pricing strategy. Keep reading for Step 1 and check the Shopportunities column in the coming weeks for new blogs in this pricing strategy series.

Step 1: Embracing change–The first and most important step

 

Change is good

The first step in optimizing your grocery pricing strategy starts with getting over the first (and probably the biggest) hurdle that you face–embracing change.

Undoubtedly, today’s retailers recognize price optimization is important. And while many retailers have a pricing strategy in place, many are using outdated–and often manual–approaches and tools that are more category-centric rather than customer-centric.

But, the stakes have changed. As the world grows increasingly dynamic and competitive, with leading digital players such as Amazon moving to optimize all prices in near-real time, retailers need to find ways to keep up. It’s time to move away from traditional category-driven approaches to pricing and open our eyes to new solutions and embrace operational change.

Forget traditional category pricing structures

Why the resistance to change? For starters, many grocery retailers are working with very thin margins, increasing competition and price transparency. In the past, businesses relied on their experience as well as traditional category structure and pricing rules to inform their pricing strategy, rather than adopting more sophisticated data-driven optimization. These tactics may have worked before, but they are no longer enough for survival.

Customers are acutely value-conscious and want price transparency from retailers. Finding a happy medium between improving price perception and meeting performance targets is a challenge. Keeping up with consumer expectations is no longer an option–it’s a necessity.

Embrace real-time, dynamic pricing strategies

How can you keep up? If you recognize that traditional solutions like rules-based, category-specific pricing strategies are no longer sufficient–especially as leading retailers are moving to dynamic, real-time omnichannel price optimization–then you’re a step ahead.

Retail innovators have set a new standard by adjusting prices based on customer and market/competitive behaviour across all categories and items (every day moving to intra-day activation). The sooner you operationalize change, the closer you’ll get to the bar set by the front-runners and the further ahead you’ll be of those competitors who are not yet tapping into the full potential of this opportunity. Hesitant to invest in data analysis for pricing optimization in-house? You’re not alone. Read my previous blog to learn why successful grocery retailers are outsourcing analytics to get ahead.

Reap the benefits of real-time pricing

While it’s a considerable change to make, the results are worth it:

  • Maintain profits and stay competitive: Taking a holistic, omnichannel and real-time pricing approach is proven to drive a 2% to 3% increase in sales and profit while improving competitive price position and perception.
  • Inform optimal price recommendations: Next generation solutions can help you set optimal prices across the business, plus inform everyday shelf price and promotional prices.
  • Meet customer expectations: Real-time pricing allows you to give your customers what they want, including transparency and prices that reflect their perception of product value.

If you’re ready to embrace change, it’s necessary to leave traditional pricing strategies in the past and start shifting to real-time pricing and transparency. Not only will this help you get the jump on your competitors, but it will also help you meet customer needs and expectations–and maybe even exceed them.


Ready for the next steps?
 Keep an eye out for my upcoming blogs where I’ll cover even more best practices for optimizing your pricing strategy.

 

Pricing Strategy

Pricing optimization

blog

Brian Ross

About the author

BROSS-2

Brian Ross

President

As president of Precima, Brian works with some of the world’s leading brands to deliver world-class customer-centric solutions through strategic consulting, industry-leading analytics and a next-generation technology platform. His vision and leadership helped launch Precima in 2008 as a three-person startup, and he has since grown it into a global leader in retail, B2B and CPG strategy and analytics with over 300 experts in Canada, the United States and Europe. With an extensive background in loyalty solutions, customer marketing and merchandising strategies, Brian oversees the strategic and operational management responsibilities, as well as relationships with customers and business partners.

Before Precima, Brian spent several years in management positions across LoyaltyOne businesses, notably providing client management and analytics support for key partners of the AIR MILES Reward Program. He used data-driven customer insights to develop successful programs for clients in grocery, pharmacy, department store, specialty retailing, financial services and consumer packaged goods. Brian shares his broad range of expertise and thought leadership in regular features in leading marketing publications, and is a frequent speaker at industry events and forums.

A step-by-step guide to optimize your pricing strategy

Jun 26, 2019, 17:15 PM
Today’s grocery retailers face many challenges when it comes to optimizing pricing strategies–namely, keeping up with digital-savvy...
Youtube video url :
Featured : Yes
Gated content : No
Publication date : Jun 26, 2019, 00:00 AM

Today’s grocery retailers face many challenges when it comes to optimizing pricing strategies–namely, keeping up with digital-savvy retailers and the evolving expectations of equally savvy consumers. To help retailers stay ahead of the curve, I want to share the important steps you need to take in order to optimize your retail pricing strategy. Keep reading for Step 1 and check the Shopportunities column in the coming weeks for new blogs in this pricing strategy series.

Step 1: Embracing change–The first and most important step

 

Change is good

The first step in optimizing your grocery pricing strategy starts with getting over the first (and probably the biggest) hurdle that you face–embracing change.

Undoubtedly, today’s retailers recognize price optimization is important. And while many retailers have a pricing strategy in place, many are using outdated–and often manual–approaches and tools that are more category-centric rather than customer-centric.

But, the stakes have changed. As the world grows increasingly dynamic and competitive, with leading digital players such as Amazon moving to optimize all prices in near-real time, retailers need to find ways to keep up. It’s time to move away from traditional category-driven approaches to pricing and open our eyes to new solutions and embrace operational change.

Forget traditional category pricing structures

Why the resistance to change? For starters, many grocery retailers are working with very thin margins, increasing competition and price transparency. In the past, businesses relied on their experience as well as traditional category structure and pricing rules to inform their pricing strategy, rather than adopting more sophisticated data-driven optimization. These tactics may have worked before, but they are no longer enough for survival.

Customers are acutely value-conscious and want price transparency from retailers. Finding a happy medium between improving price perception and meeting performance targets is a challenge. Keeping up with consumer expectations is no longer an option–it’s a necessity.

Embrace real-time, dynamic pricing strategies

How can you keep up? If you recognize that traditional solutions like rules-based, category-specific pricing strategies are no longer sufficient–especially as leading retailers are moving to dynamic, real-time omnichannel price optimization–then you’re a step ahead.

Retail innovators have set a new standard by adjusting prices based on customer and market/competitive behaviour across all categories and items (every day moving to intra-day activation). The sooner you operationalize change, the closer you’ll get to the bar set by the front-runners and the further ahead you’ll be of those competitors who are not yet tapping into the full potential of this opportunity. Hesitant to invest in data analysis for pricing optimization in-house? You’re not alone. Read my previous blog to learn why successful grocery retailers are outsourcing analytics to get ahead.

Reap the benefits of real-time pricing

While it’s a considerable change to make, the results are worth it:

  • Maintain profits and stay competitive: Taking a holistic, omnichannel and real-time pricing approach is proven to drive a 2% to 3% increase in sales and profit while improving competitive price position and perception.
  • Inform optimal price recommendations: Next generation solutions can help you set optimal prices across the business, plus inform everyday shelf price and promotional prices.
  • Meet customer expectations: Real-time pricing allows you to give your customers what they want, including transparency and prices that reflect their perception of product value.

If you’re ready to embrace change, it’s necessary to leave traditional pricing strategies in the past and start shifting to real-time pricing and transparency. Not only will this help you get the jump on your competitors, but it will also help you meet customer needs and expectations–and maybe even exceed them.


Ready for the next steps?
 Keep an eye out for my upcoming blogs where I’ll cover even more best practices for optimizing your pricing strategy.

 

Tags :
  • blog
  • Brian Ross
  • Pricing optimization
  • Pricing Strategy
Categories :
  • Blog
uxdesign
Author : Brian Ross
Related Companies
Related Capabilities