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Tailored Price Optimization Fuels Russian Supermarket's Rapid Growth

Tailored Price Optimization Fuels Russian Supermarket's Rapid Growth

Doubling your store count is quite a feat in any market, but it's even more impressive in a boom-and-bust Russian economy struggling with international sanctions. Nevertheless, DIXY, Russia's third-largest grocery chain, increased its footprint to 2,600 locations in more than 750 cities over the past four years. Tailored, region-specific price optimization was a major ingredient in the retailer's success.

Since implementing the Revionics Price Optimization solution, the retailer has:

• Doubled its number of stores while maintaining the same size pricing team;

• Improved accuracy with the use of price automation and decision automation solutions; and

• Used customer-focused pricing to win shoppers away from traditional small grocers, fueling additional growth.

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DIXY selected Revionics following a search that began in 2012. Once the retailer implemented the solution, DIXY expanded its use category by category, allowing the company to "establish credibility and effectiveness incrementally, consolidate our new knowledge levels, and move to the next set of categories," said Mordvin in a statement.

"We've moved from having a pretty uniform approach for each category to a much more powerful differentiated value proposition in each category," he explained. "We began with beer and oils, then expanded into fruits and vegetables, poultry, milk and cheese, and now more broadly across other categories."

Facing A Wide Range Of Competitors

DIXY has needed high levels of flexibility from its solutions as the company has expanded through different regions of Russia, which can vary widely in terms of geography, customer demographics and competition. DIXY has been able to "tailor pricing strategies by region depending on the competitive landscape — supermarkets, hypermarkets or regional competitors — and factoring in shopper elasticity to drive increased traffic, margins and sales at the individual store level with very nuanced differentiation," said Mordvin.

The DIXY pricing team makes extensive use of Revionics' "what-if" functionality. "The ability to quickly run varied scenarios, see different impact in different categories, and have insight into elasticity down to the item level is very powerful," he said. "It enables us to make more nuanced decisions and become more and more automated in our end-to-end pricing processes."

DIXY has also begun implementing Revionics Promotion Optimization, to drive more strategic results from its promotional activity. Key goals include:

• Driving double-digit growth in its share of promotions;

• Increasing promotion-driven traffic in DIXY stores; and

• Increasing forecast accuracy for more accurate replenishment stock planning.

Mordvin also appreciates the solutions' scalability: "As we add hundreds of stores per year, the ability to scale decision automation using both business rules and transparent science-based price optimization is critical, all while moving the needle in a strategic way on price perception."

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