A feature article in The Wall Street Journal earlier this fall looked at how the food business is being hit by demands from retailers seeking to draw in shoppers. “America's packaged-food companies are coming under pressure from retailers who are pushing big brands to lower their prices.” the story begins, before reporting how leading food retailers are vying to find ways to attract shoppers amid intensifying competition.
As a result, the article states, food makers “have been struggling with declining sales for years as shoppers move away from older brands and toward food options perceived as fresher and healthier. Now retailers are adding to the packaged-food companies' woes.” Walmart, Kroger and others are pushing the CPG companies to lower prices so they can compete more effectively with the likes of Amazon and other ecommerce players.
Adding to this electrically-charged trading partner atmosphere, shoppers are now constantly being bombarded with a variety of products and price points. In fact, they are now more price savvy than ever. And if they’re not satisfied with your prices, they won’t hesitate to look elsewhere. The reality is that retailers must find a way to maintain their competitive advantage over the long term. The ideal end-state is to have a loyal customer base that doesn’t consider shopping anywhere else. Is that a pipe dream? More importantly, what are companies doing?
Some are boosting their technology spend to communicate more effectively with their customers and/or to analyze their data. Others are regularly collecting competitor pricing data and adjusting their prices accordingly. With the increasing pressure on pricing, the solution to long-term, sustainable growth is continually thinking outside the box to drive enhanced price perception, satisfy existing shoppers and win new shoppers.
Smart companies understand that slashing prices isn’t necessarily the answer to effective price planning. They need to dive deeper to the very core of their customers to find what drives certain behaviors. The key is uncovering valuable shopper insights, using those findings to truly understand various segments and then creating a foolproof, analytics-based approach that meets customer needs and desires. It sounds easy enough, but it requires the right tools and assets. Advanced shopper analytics reveals the most valuable customer segments, and which products are predominantly purchased by those valuable customers on the basis of low-prices.
How can companies achieve all of this and still come out on top? By putting shoppers under the microscope, and at the center of all your important decisions.
Companies want their customers to be happy. This means customers are satisfied with their purchases, knowing they bought items at fair, competitive prices and, above all, want to come back. Many companies believe they’re doing a good job of embracing and utilizing their shopper data, but the truth is, their shoppers aren’t seeing it. Companies aren’t focusing on the issue at hand – how their customers are distinguishing price perception when choosing their preferred stores. According to a recent Precima survey, 92 percent of shoppers want coupons based on what they buy, and 95 percent want attractive offers and rewards based on their loyalty – all of which should amount to a first-rate customer experience.
For companies to take on a more customer-centric approach, challenges need to be tackled head on. Leveraging data-driven insights must be incorporated into strategic decisions, used to change organizational mindsets and improve processes and training infrastructure. Departments need to start operating collaboratively across the business. The merchandising team needs to ensure that prices are aligned with the needs and demands of shoppers while the marketing department must ensure that customers are aware of price investments to maximize the credit they receive for the lower prices. By using customer-centric tactics, retailers will be able to compete effectively and sustainably by employing shopper solutions that deliver value to the areas that matter the most.
Chances are, most companies are already collecting customer data in some way, shape, or form. Meaning, the solution is right under their noses. It’s just a matter of having the right tools to leverage and apply those insights to optimize pricing strategies effectively. Let the deep shopper analytics do the talking and don’t get left behind. Deliver the best prices to the right customers, at the right time, at the right place. At the end of the day, it’s the retailers who are proactively managing their pricing decisions in a shopper-centric way that are coming out on top.