End-to-End Merchandise Optimization White Papers
Maximizing Inventory Productivity with Localized Markdowns
Abstract for Maximizing Inventory Productivity with Localized Markdowns:
Early implementations of Markdown Optimization technologies (MDO) were primarily in the realm of fashion apparel. Retailers selling this merchandise had to make room for the next round of product heading for their doors. These markdowns were rarely store specific: instead they were about turning over floor stock and freshening up "the look" across the chain as expediently and profitably as possible.
Fast forward ten years. Markdowns are no longer the exclusive realm of fashion. Today, while fashion retailers have challenges beyond just clearing out one generation of product so they can bring in the next, retailers of all stripes must think about the role markdown plays across all kinds of product categories, from short lifecycle to long. And in a world where retailers endlessly tweak price and observant consumers keep a sharp eye out for price changes, shareholders expect retailers to not only meet consumer demand, but do it in an environment of increasing inventory productivity.
These combined challenges of shifting consumer demands, continued consumer price sensitivity, and omni-channel pressures to provide more localized inventory have created an environment where unproductive inventory is now a more painful issue than out-of-stocks. In this short paper, we'll take a look at how these factors are driving retailers to consider localized markdowns as part of their overall pricing strategy across a broader range of merchandise categories.
Download Two White Papers:
Maximizing Return on Store Space with Optimization
Three Trends Changing the FMCG Ecosystem
Abstract for Maximizing Return on Store Space with Optimization:
The purpose of this white paper is to provide an in-depth analysis of how space and underlying assortment optimization helps retailers strategically and methodically address the transformation of a store’s space in response to changing market conditions.
In addition, Revionics explores the implications of all of these challenges in a case study that shows how optimization science enabled our retail partners to make fact-based, loyalty-driving and profitable store space reallocations, category expansion and contraction decisions, and category role reassessments.
Abstract for Three Trends Changing the FMCG Ecosystem
This paper addresses at a high level three important trends that are permanently changing the FMCG competitive ecosystem. These changes affect all the industry participants: retailers, manufacturers and the diverse community of solution providers. The three trends and their implications are:
- The Growing Power of the Retailer. The traditional weapons of FMCG mass marketing (TV and magazines) have lost effectiveness and especially efficiency thereby debilitating brand equity building. At the same time retailers have consolidated and now dominate the moment of truth at the shelf aided by new tools such as loyalty cards. The balance of power has permanently shifted towards the retailer.
- The Digitally Empowered Shopper. Today’s shopper can rapidly compare price and quality. This creates new shopping behaviors especially the cherry picking of formats to satisfy specific shopper need states.
- The Big Data Big Bang. Digitally driven shopping behavior creates billions of variegated data points. This tsunami of data comprises ‘big data’. Applying new predictive analytics to this expanding data universe enables marketers to better understand their shoppers' behavior.
For additional insight, we would like to offer you these valuable materials:
Click here to view the PDF deck from the Webinar around this topic.
Click here to view a Q&A document, which was developed from questions attendees had after the webinar on this topic.
Connecting with the Omni-channel Shopper:
Building Digital Bridges & Social Amplification
The social commerce landscape is noisy and focused on metrics that may or
may not be contributing to sales or new customer acquisition. Many vendors in
this space focus solely on pureplay eCommerce retailers, leaving multi-channel
merchants with no means of tracking or influencing the complex path to purchase that has been created by the new digital landscape. Revionics® Social Commerce (RSC) is uniquely positioned to give a holistic view of the customer across the entire shopping episode because it bridges the gap between online, in-store, social and mobile. RSC is focused on not only generating “likes” and increasing the loyal shopper base but also on driving measurable ROI at the shopper’s preferred point of purchase.
Exploiting this new shoppers’ willingness to share information in exchange for
special treatment and personalized engagement is the best way to drive loyalty in the hypercompetitive, over-promotional world in which retailers now operate. It is the way to capture and retain attention and drive loyalty when competitors are
merely a click away.
Price Optimisation: New tools facilitate pricing in an omni-channel world
(Provided by Planet Retail)
Today’s retailers must respond to, and keep pace with, increased competition for a share of cost-conscious consumers in increasingly saturated and fragmented markets. To do so, they must fight to manage complex supply and demand margin pressures, where price is increasingly becoming a key weapon. Here, price optimisation tools are developing as retail’s first line of defence.
As more consumers enter stores armed with smartphone -powered price comparison tools at the shelf edge, many retailers are harnessing point of sale (POS) and loyalty data together with the latest science-based analytics to gain insight into consumer buying habits. Combined with competitive intelligence, this information feeds price optimisation software to implement the best pricing strategy based on channel, location and even demographics.
A new generation of sophisticated, science-driven price optimisation software can help retailers tackle these challenges by executing competitive positions, pricing strategies and tactics to improve margins and drive customer loyalty at the same time. Unlike early generation tools that took a ‘black box’ approach, today’s tools also provide transparency into their recommendations and can enable an evolutionary path from rules-based optimisation to a science-based one.
This report will assess and explore the latest trends in price optimisation software adoption among retailers, evaluate best practice examples from all over the world and highlight future development trends.
Drive Purchases and Win Customers with Strategic Social Commerce
Chances are your social commerce strategy is in crisis; that is, in the Chinese language sense of the term, it is a dangerous opportunity. Opportunity lies in converting social interactions into transactions, turning fans into vocal brand advocates and amplifying their lifetime value as loyal customers, and building monetary brand value. Danger lies in constructing unprofitable incentives, events, and venues that disappoint the customers you engage or in underserving social opportunities altogether while your competitors gain ground. Your social commerce activities compete for the attention and dollars of Five-I customers, or those who are instrumented with smartphones and tablets, interconnected across social networks, informed by Web content, in-place anywhere to act, and immediate in their ability to act as they choose.
Pricing in a Multichannel World:
The new role of key value items
Pricing is — and always has been — a key value lever for retailers. Over the past several decades, retailers have continually refined their strategies, methodologies, and tools to optimize pricing. In a multichannel retailing environment, however, retailers are finding that the traditional approach needs an overhaul. Several questions lie at the heart of many retailers’ pricing conversations.
This article centers on KVIs and the relevance and evolution of the concept in a multichannel environment. We explore three topics: the best-practice traditional approach to KVIs, how multichannel dynamics could change the game, and the key implications for a multichannel KVI approach.
RSR Benchmark Report:
Optimizing Assortments to Reinvigorate Retail
A unique combination of forces including continued economic uncertainty, the omni-channel phenomenon powered by the consumerization of IT, the emergence of a new generation of merchants, and retail’s brand globalization have driven the industry to one conclusion: localized assortments driven by customer and store attributes are necessary to support the best possible sales while controlling inventory and costs. Little doubt remains that the art and science of retail merchandising have changed irrevocably.
In this fifth annual Merchandising Benchmark Report, we set out to see what progress has been made in changing merchandising processes within retail companies both large and small.
We found disturbing trends among mid-sized retailers, and more positive shifts among those who over-perform on annual comparable sales. Mid-market results, in particular, are alarming. However, as we’ll see below, the industry’s overarching appreciation of automated tools and techniques continue to rise.
Retail Strategies to Offset Drought Impact
(and Other Economic Shocks)
The convergence of drought, heat and economic conditions are contributing to an event of historic proportions. To respond and prepare for the long-term effects, U.S. retailers must be strategic with price, promotion, space allocation and assortment strategies and tactics in order to maximize return on investment, respond to the inflationary impact and address the subsequent changes to consumer demand patterns.
Here are some practical ways to utilize optimization, predictive analytics and advanced data mining technologies and strategies to rapidly respond to changing shopper and competitor behaviors and navigate these unprecedented challenges with confidence.
Markdown Optimization: Worth More than Its Price
Markdown optimization (MDO) is a maturing class of applications already widely used and yielding substantial benefit quickly. Like other price optimization applications for regular and promotional pricing, MDO has proven ROI. CEOs and CFOs of public companies commonly mention MDO in quarterly earnings calls, and they have been doing it for years. Many retailers in the market to buy MDO applications tend to shun drawn-out proof-of-concept efforts lest they leave money on the table. These systems can pay for themselves within a 13-week season, sometimes quicker.
Optimizing Prices in an Omni-Channel, Price-Transparent World
Pricing pressures on retailers are coming from multiple directions today.
Consumers’ non-linear shopping patterns have made customers more
aware of, and sensitive to, retailers charging different prices in different
channels. The flood of smart consumer mobile devices has made
price transparency a fact of life for a large and growing segment of
the industry. The stalled economic recovery has increased the pool of
bargain-hunters, making it more difficult for retailers to improve their
margins by raising prices without harming customer loyalty.
Pricing in Inflationary Times
Never before have today’s retailers encountered the confluence of so many difficult market conditions. It all adds up to a difficult-to-crack puzzle for retailers seeking pricing strategies that will keep consumers buying yet preserve margin. This white paper will provide ways in which retailers can optimize their pricing strategies to remain strong in these challenging economic times.
Price Optimization for Retailers
Pricing strategy has always been an important consideration for successful retailers; however, recent advances in the science and heuristics that drive price optimization are delivering significant benefit to sellers of fast-moving retail goods. This paper examines the emergence of price optimization, explores its relationship to retail goods, suggests best- practices, and highlights the challenges organizations typically face during adoption of a price optimization program.
Distinguishing Price Optimization from Rules-Based Pricing
Pricing represents both tremendous opportunity and high-risk challenge for today’s retailer. Current pricing methods have left many retailers playing a game of "follow the leader" behind market competitors. This white paper will discuss the way that price optimization systems listen to and interpret shopper behavior, predicting the best price for retailers to appeal to consumer demand.
Second-Generation Price Optimization
Early adopters used first-generation systems to analyze ever-growing volumes of sales data and bring science to the art of retail pricing. But now, second-generation price optimization systems are revolutionizing retail operations management. This white paper discusses second-generation systems and how they are derived from advanced mathematics, statistics, and econometrics to bring promises of first-generation systems to fruition.
Retail Pricing Strategy Insights & Opportunities
Pricing strategy plays a critical role for retailers of all sizes. As advances in science and technology allow retailers to integrate real-time consumer demand data, competitive activity, along with pricing rules, creating and implementing a sophisticated price strategy is emerging as a powerful opportunity for retailers to increase revenue and profit.
Impact of Seasonality on Life Cycle Pricing
Seasonality can have a dramatic impact on how, when, and what products are purchased throughout the year, making it an integral part of retail pricing strategy. This white paper discusses the role of seasonality as it relates to demand, and how retailers can use price optimization software to translate seasonal buying patterns into measurable, predictable, and profitable pricing strategies.
Science Propels New Era of Pricing
Most retailers know that technology plays a critical role in setting retail prices. But until recently, these efforts have been rooted in advances in computing technology, rather than in newfound applications of scientific principles. This paper explains why retailers can no longer thrive without a science-based pricing system, defines and illustrates the right science-based approach, and calls out the key features and functionalities of leading science-based price optimization systems.
Price Elasticity and Its Applications
Elasticity is the key to understanding how pricing and pricing decisions will influence retail customers. This white paper introduces the concept of price elasticity, cause and effect of variations, and examines practical uses of elasticity calculations for retailers that lead to improved sales, profitability, and customer satisfaction.
Selecting a Price Optimization Solution
While the view that price optimization is a critical component of the retailer’s go-forward strategy has been widely supported by industry analysts, less has been written about the relevant considerations in selecting a price optimization solution. The focus of this white paper is to provide guidance to the retail executive who is evaluating price optimization solutions.
Software as a Service: A Better Approach for Retailers
For retailers of fast-moving consumer goods, price optimization software has become a must-have tool. As the pace of development and complexity of modern price optimization systems continues to evolve at unprecedented speeds, more retailers are discovering the value of Software-as-a-Service (SaaS). This white paper discusses the top-10 benefits of SaaS for price optimization software.
Grid Computing in the SaaS Environment
Retail planning applications such as pricing, promotions, and markdown require weekly, daily, and on-demand processing to leverage the most up-to-date data and enable retailers to optimize profit and revenue. SaaS Grid Computing shares resources among many retailers and provides much more efficient use of hardware. This paper discusses how grid computing surpasses on-premise applications in meeting retailers’ planning and data processing needs.