This January we had a great lineup at a NRF panel focused on near-term trends in retail pricing and promotion. It’s clearly a topic with lots of retail mindshare – it played out to a crowd that swelled the room to standing-room-only and even (reluctantly) turning away attendees when we exceeded capacity. Fortunately we have made a video of the panel available so if you missed it, or want to revisit highlights, it’s at your fingertips!
EKN’s Sahir Anand kicked us off with highlights from a recent survey of retailers and their pricing practices and planned areas of priority. In the next 12 months, retailers ranked their top priorities with in-depth competitive price trend analysis and predictive analysis for price, promotion and markdown optimization topping their to-do lists. Just behind were machine learning for price and promotion and price elasticity analysis for pricing and promotions. He also explored results on the frequency with which retailers change prices.
In essence, the panel was designed to help retailers successfully transition to more agile, responsive pricing to position them for success amid increasingly severe market pressures. But I love Cheryl Sullivan’s comment on how much fear and misunderstanding there is around the term “Dynamic Pricing” – the specter of prices changing as customers roam the store or between when they select an item and when they reach checkout. In reality, even very dynamic pricers like Amazon don’t change the price over and over again on every item. Price changes should leverage science to be highly targeted and change where price updates are meaningful to customers and factor in the competitive landscape.
John noted how much price transparency has permeated the retail world in just the last few years – a calendar-based price cadence doesn’t work in a world where customer expectations move and change at the speed of social media.
The panel went on to address organizational readiness for supporting dynamic pricing, how the pricing team can move from manual tasks to value-add strategic activities like modeling strategies.
Farmacorp CIO Andres Valdivieso led his organization to more responsive, automated pricing as he sought a way forward for his team, whose manual processes were being overwhelmed by fast-growing data volumes. As they deployed Revionics Price Optimization, they configured business rules to set parameters and give them confidence in automatically accepting more and more of the science-generated price recommendations. Growing at 10-15% annually, Farmacorp has seen amazing results from price optimization, delivering profit increases of 8-10% while actually educing margins on those items that face the most consumer sensitivity and competitive elasticity. It’s fascinating to hear Andres describe that journey.
There was some spirited Q&A with audience members at the end, which I won’t spoil for you. I suggest you get yourself a cup of coffee or tea, take a moment to think about how your organization might benefit from more agile, responsive pricing, then follow our panelists’ discussion for actionable, and engaging, insights into a successful transformation. Happy viewing!