Pricing - Retail TouchPoints - Retail TouchPoints https://www.retailtouchpoints.com Fri, 20 Sep 2019 01:51:28 -0400 RTP en-gb PriceSpider Acquires ORIS Intelligence https://www.retailtouchpoints.com/features/mergers-and-acquisitions/pricespider-acquires-oris-intelligence https://www.retailtouchpoints.com/features/mergers-and-acquisitions/pricespider-acquires-oris-intelligence PriceSpider Acquires ORIS Intelligence

PriceSpider, a data and consumer analytics technology firm, has acquired ORIS Intelligence, which provides near real-time analytics on pricing inconsistencies for brand manufacturers. Details of the transaction have not been disclosed.

Leveraging its proprietary “spidering” technology, PriceSpider collects data from thousands of e-Commerce sites to provide analytics into product data, competitive comparisons, purchase decisions. Ultimately, the solution is designed to help brands enhance their presence and increase sales. With ORIS, PriceSpider can prioritize the integrity of pricing data “above all else,” PriceSpider CEO Anthony Ferry said in a statement.

Under the acquisition, the two companies’ flagship solutions — the PriceSpider Where to Buy solution and the ORIS minimum advertised price (MAP) platform — can complement each other.

With Where to Buy, brands can display real-time product pricing and stock availability at online and local retailerson their brand web site, banner ads, social channels and YouTube videos. Additionally, brands can send consumers emails about product stocks or price changes. The MAP platform enforces a minimum price everywhere a brand’s product is sold online, and even discovers sellers that are unauthorized to sell the product.

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feed@retailtouchpoints.com (Glenn Taylor) Mergers & Acquisitions Mon, 05 Aug 2019 10:32:30 -0400
Technology In Retail; Dynamic Pricing In Store — One Possible Future https://www.retailtouchpoints.com/features/executive-viewpoints/technology-in-retail-dynamic-pricing-in-store-one-possible-future https://www.retailtouchpoints.com/features/executive-viewpoints/technology-in-retail-dynamic-pricing-in-store-one-possible-future

0aaaDavid Moran EversightJohn Russo, our Retail leader, and I recently visited Amazon’s 4 Star store in New York City. The concept is simple enough — popular items, biased towards gifts/specialty items, with 4-star reviews or higher on Amazon.  I walked in expecting to see a lot of the technology innovations that we’ve come to expect from an Amazon Go or similar concept… but realistically it looked like a nice, normal gift shop…no crazy ceiling with a million cameras or other loads of unusual hardware.

What the store did have was Electronic Shelf Labels (ESLs). At Eversight we’re a big fan of ESLs and their breakthrough capabilities when it comes to digitizing the physical shelf. But a big dilemma that we wonder about is how ESLs will realistically support dynamic pricing in store. 

In Amazon’s case, they chose to link the pricing of the items in-store to the price that you see on Amazon.com (John and I checked, extensively). But that also poses a challenge for the shopper experience. You see, on Amazon items often move around a lot, like the GoPro5 camera.

Sure enough, I even caught a change in the act: the GoPro tag’s background looked reddish compared to the normal tag — that’s the color that ePaper takes on for a few seconds after a change to the tag occurs.

So, conceivably, someone could pick up an item and have the price change on the tag before they make it to the checkout. Amazon tries to counterbalance this with your usual price checking software near the entrance to the checkout line, so at any time you can scan your item and check to make sure it hasn’t moved on you….

My sense is this is probably fine for a gift shop. It’s a limited assortment, the trip is fast, and in the rare case that a “negative” change occurs for a shopper (like the GoPro), you can always set an alert to have a cashier inform the shopper, or create some lag logic in the POS to discount it to the lowest price offered in the last 30 minutes, etc.

The biggest concern for me is the shopper experience. I can’t imagine loading up my grocery cart and getting to the checkout only to discover that my Cheerios are now more expensive. The abandonment issues at the front of the store, bad shopper experiences, etc. would pile up. However, realistically this could be solved by a grace period on price increases of 60 minutes, or plenty of other workarounds. 

0aaaESL tag 1

For most Revenue Management teams from a supplier background the assumption is that price changes like this are illegal — that you can’t charge two different people two different prices due to laws like the Robinson-Patman Act. This is not the case. Those laws around equal treatment refer to price differences when selling to retailers or other vertical business partners — there is no such consumer protection law. What I observed in-store is completely allowed under U.S. law when it comes to differentiating prices to end consumers. There may however be state-specific laws, governed by Weights and Measures, but typically enforcement tends to be tied to areas where consumers are directly harmed — if prices charged are the lower of the published prices over the last hour, etc. where changes are always in the favor of the shopper, generally I’d expect regulators to not intervene. 

So net, could I see a world where not too far from now we have dynamic pricing on shelf? Absolutely. 

0aaaESL tag 2

From a practical standpoint today in consumable categories, I don’t think this is going to happen any time soon. First, very few retailers have ESLs in the U.S. market (although that’s about to rapidly change). Second, dynamic pricers like Amazon don’t matter all that much yet — it’s only 1%-2% of sales for most categories. But it’s coming, and for certain categories of products where the e-Commerce penetration could already be 50% or greater, I’d expect those categories to lead the way. Diapers. Pet food. Certain categories of household care. Those are likely the canaries in the CPG industry…watch those for an indication of what’s to come for the rest of the store. 


 

David Moran is Co-founder and Chairman of Eversight. Moran has spent his career in Consumer Goods and Retail, most recently as the Global VP of Sales-Revenue Management for Anheuser-Busch InBev, the world’s largest brewer. He was also a leader in McKinsey & Company’s Consumer Pricing Practice where he developed strategies for global retailers and brands.

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feed@retailtouchpoints.com (David Moran, Eversight) Executive ViewPoints Mon, 10 Jun 2019 09:03:46 -0400
What Retailers Learned In 2018: It’s All About Customer Data-Driven Strategy https://www.retailtouchpoints.com/features/executive-viewpoints/what-retailers-learned-in-2018-it-s-all-about-customer-data-driven-strategy https://www.retailtouchpoints.com/features/executive-viewpoints/what-retailers-learned-in-2018-it-s-all-about-customer-data-driven-strategy

0aaaJose Gomes dunnhumbyAt a recent industry event, I quipped that this is “the best of times and the worst of times” for retailers. Implicit in my comment — which was a paraphrase of the opening lines of A Tale of Two Cities, the Charles Dickens classic about the French Revolution — that the retail industry is undergoing a revolution of its own. Never mind the “retail apocalypse.” What retailers have begun to realize is that the demise of their businesses is not a foregone conclusion. This is a time for retailers to take action, not sit idly on the sidelines. In 2018, we saw more retailers take action by equipping themselves with the most important weapon for battle: customer strategy fueled by customer data science.

Why is this happening? It could be that the ever-looming threat of Amazon, which has ventured boldly beyond e-Commerce and into physical spaces as well, with the steady spread of its 4-star stores throughout the U.S. It could also be the emergence of grocery discounters that are forcing retailers everywhere to rethink pricing and overall value propositions for customers. It could also be the example of retailers of all sizes to embrace the art and science of customer data which has begun to be democratized, and no longer the exclusive domain of online and offline giants.

In 2018, it paid for retailers to use data science to better understand and engage their customers, while delivering the most relevant experience possible. Here are five areas where customer data-driven strategy helped retailers reimagine themselves in the past year.

Price

Without customer strategy, the pressure on prices — which comes from many players beyond the discounters — can lead to the inevitable race to the bottom. Smart retailers, however, are using first- and second-party data to rethink their entire pricing model based on the concept of value. Recent research my company released shows customers are more driven to make decisions as to where they shop based on perceived value, not price per se. The formula: divide quality by price, and that gives you a better idea of what your customer wants, and how to put the customer first. For example, customers happily exchange the time it takes to shop at Costco and Walmart for lower prices — a choice driven by a subconscious cost/benefit analysis of each retailer’s value proposition.

Space

Customer data-driven strategy is also helping retailers rethink the entire shopping experience, another area where value is created. In this video featuring a Cleveland grocer that transformed a downtown landmark into a one-of-a-kind urban shopping experience — I ask the question, “If you live downtown, in an American city, and you need to shop for groceries, what would you need to get you out of the house, especially on a cold winter’s day?” Studying the shopping habits of customers in both urban and suburban environments, many retailers are providing more engaging, personalized experiences with creative approaches to the use of one of their more important assets: space. But reimagining physical space can also have an immense impact on operating costs. A recent article in the Wall Street Journal looks at large retailers that are reducing the size of underperforming locations and favoring what the industry calls “small format stores.” But this is not just a cost-cutting measure. Using customer-data powered technology like smart mirrors, retailers are transforming cluttered aisles to more elegant, virtual “endless aisles” that provide store visitors with unique experiences.

E-Commerce

But retailers, of course, can’t just compete in the physical realm. With the advent of services like home delivery and in-store pickup, retailers need to be “amphibious” — capable of moving seamlessly between online and offline environments. This is an area of innovation where customer strategy really matters, and some retailers are taking it seriously. A recent study by Packaged Facts predicts that the grocery e-Commerce market will quadruple by 2023.

Brand

A survey of food retailers shows that brands with a more homogenous customer and store footprint perform better. Why? Because they deliver a brand proposition that is more consistent with their customer’s expectations. They opened most stores in the last 30 years, and as such their customers are more homogenous, and they better understand their customers — their habits, their biases, their preferences. But that level of understanding requires an investment in customer strategy.

Investment

And retailers, in fact, are investing. In November, the Wall Street Journal reported that food retailers in 2018 doubled their investment in technology over the previous year. One big area of focus: artificial intelligence, a large complex of technologies that are helping retailers rethink everything from optimizing operations, to predicting customer preferences, to providing great customer experiences. And again, these are technologies that are driven by customer data, but deliver the most value when deployed to support customer strategy.

“If data is the new oil,” food retailers were big importers of this resource in 2018 to fuel their customer strategy. We expect they will import even more in the coming year.


Jose Gomes is the President in North America of dunnhumby, a customer data science leader, empowering businesses everywhere to compete and thrive in the modern data-driven economy.

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feed@retailtouchpoints.com (Jose Gomes, dunnhumby) Executive ViewPoints Mon, 10 Dec 2018 08:18:15 -0500
Amazon Dominates Specialty Retail Prices, But Walmart Shrinks Pricing Gap To 2.3% https://www.retailtouchpoints.com/features/news-briefs/amazon-dominates-specialty-retail-prices-but-walmart-shrinks-pricing-gap-to-2-3 https://www.retailtouchpoints.com/features/news-briefs/amazon-dominates-specialty-retail-prices-but-walmart-shrinks-pricing-gap-to-2-3 Amazon Dominates Specialty Retail Prices, But Walmart Shrinks Pricing Gap To 2.3%

When it comes to pricing, Amazon is still king. The e-Commerce giant maintained its price leadership position on the broadest selection of popular items, averaging prices that were 13.4% lower than retailers carrying the same items in Q2 2018, according to a study from Profitero.

Walmart had the most competitive prices compared to Amazon’s, averaging only 2.3% higher overall. The price gap between the two retail giants is closing: Walmart prices averaged 3% higher than Amazon in Q3 2017. Jet.com had prices 4.2% higher than Amazon, while Target averaged 11.8% higher. Additionally, Jet.com has decreased grocery prices 5% since February 2018; now those prices are only 0.6% higher than Amazon’s.

Amazon continues to dominate specialty retailers from a pricing standpoint. On average, Amazon is:

  • 13.3% cheaper on appliances and 15.2% cheaper on electronics versus Best Buy;
  • 18.4% cheaper on sporting goods versus Dick’s Sporting Goods;
  • 24.9% cheaper on furniture and 39.1% cheaper on home storage compared to Wayfair; and
  • 52.0% cheaper on household supplies compared to Staples.

Amazon also had a big lead on Toys ‘R’ Us in the toy vertical prior to its bankruptcy, being 36.4% cheaper on 46 products.

Walmart comes closest to matching Amazon’s prices in the home furniture and baby categories, pricing these products 0.7% and 0.3% cheaper, respectively.

Among the rare instances when Amazon was not offering the lowest prices in the market, Chewy.com was 2.3% cheaper in pet supplies and Jet.com had lower prices than Amazon in beauty (0.4%) and in music and CDs (2.6%).

For this study, Profitero analyzed daily prices collected from April 1 to June 30, 2018 across 16 leading online retailers. Categories analyzed included appliances, baby, beauty, electronics, grocery, home furniture, household supplies, music and CDs, office supplies, pet supplies, sports and outdoors, tool and home improvement, toys and games and video games. The study only compares prices that are collected on the same day, with both retailers in-stock on the items.

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feed@retailtouchpoints.com (Glenn Taylor) News Briefs Fri, 09 Nov 2018 15:28:01 -0500
Predictive Analytics: Optimizing Pricing And Promotions In E-Commerce Means Combining Tools https://www.retailtouchpoints.com/features/executive-viewpoints/predictive-analytics-optimizing-pricing-and-promotions-in-e-commerce-means-combining-tools https://www.retailtouchpoints.com/features/executive-viewpoints/predictive-analytics-optimizing-pricing-and-promotions-in-e-commerce-means-combining-tools

0aaaMichael Kim AAreteMost retailers are already engaged in data analytics and predictive modeling. Today, using data to predict more successful outcomes — ultimately leading to increased sales — is not as mystifying a concept as it was even a year ago. But with a market being upended by an omnichannel imperative and consumer demand for instant gratification, how can e-Commerce retailers continuously and dynamically test out business models and strategies, refresh their questions and findings, and find out what works, particularly when it comes to pricing and promotions?

Advances in AI have a role to play here. Machine learning is very powerful in point prediction, point estimates in price — the goal being to make sure you are dynamically pricing. And it’s very effective when pricing at speed. It can help improve recommendations based on a continuous learning loop, and it’s particularly applicable in price and promotion optimization.

But the biggest challenges in pricing and promotion currently are speed and innovation. Yesterday’s pricing strategy is not going to work for tomorrow, so you have to constantly reinvent yourself. Data analytics requires a focused business strategy in order to deliver positive results, one that will allow retailers to constantly reinvent different ways of capturing and segmenting their data, analyzing it, creating new products and testing product promotions in order to stay afloat.

This challenge is further complicated by the need for retailers to have an omnichannel strategy, because online crossovers may not yet always work in the store. However, when it comes to truly differentiating themselves in the market, retailers need to figure out better and stronger ways of connecting one-on-one with the consumer. And connecting the dots to accomplish this, the best approach is to employ a combination of four strategic tools.

Four Pricing And Promotion Tools That Need To Work Together

Though volume-driven retailers such as Starbucks and Dunkin’ Donuts are models of pricing and promotion success, the same principles apply to any retailer. And while the hospitality industry has always led the pack in terms of pricing and personalized promotion, many industries are now learning from each other.

At the core of strategic success in pricing and promotion are an omnichannel presence, a loyalty component, a promo and coupon program, and some level of personalization. All of these can be advanced by smart use of data and predictive analytics. Let's see how this works.

  • Omnichannel. Whether a retailer’s business goal is to increase overall margin, grow the shopping basket in the aggregate or more granularly test one new product in a specific region, it’s now become table stakes to have an omnichannel presence. Data analytics can help retailers by helping to speed innovation and merchandising decisions.
  • Loyalty. Taking the example of business travel, loyalty programs can vary by region, by market and of course by company. Nonetheless data analytics help to move these loyalty programs toward a more inclusive promotional view of the specific customer by automatically pulling in additional promotions and personalization.
  • Promos and Coupons. Getting that coupon upon checking out from Barnes & Noble for a free cookie from the café is a certain incentive for another visit to the store. Data analytics has helped target promotions for many retailers, driving both online sales and in-store traffic.
  • Personalization. Retailers have gotten creative about using many available channels to personalize their offers. For example, a number of small restaurants in Chicago post messages on Instagram saying, Tag Your Friend and you’ll win a free burger. It’s a simple concept but it exemplifies both personalization and social self-promotion; and at the end of the day, the customer gets something for free. Without data analytics, this would be impossible.

Using a combination of these four tools should help any retailer stay relevant, and predictive analytics plays a role throughout.

Mike Kim is a Director at AArete, a global consultancy specializing in data-informed performance improvement, and heads its Center of Data Excellence. He can be reached at mkim@aarete.com.

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feed@retailtouchpoints.com (Michael Kim, AArete) Executive ViewPoints Mon, 24 Sep 2018 09:09:29 -0400
E-Commerce’s $200 Billion Problem: One That AI Can’t Solve https://www.retailtouchpoints.com/features/executive-viewpoints/e-commerce-s-200-billion-problem-one-that-ai-can-t-solve https://www.retailtouchpoints.com/features/executive-viewpoints/e-commerce-s-200-billion-problem-one-that-ai-can-t-solve

0aaSebastian Kanovich dLocalAnytime I read the trades, glance at news headlines, or talk to other executives, AI seems to be the solution to all of our problems. Everyone is talking about AI. Emerging tech companies now have AI solutions at their forefront, but for companies looking to expand their e-Commerce reach globally, especially within emerging markets, AI is not the solution.

When it comes to e-Commerce issues, specifically at the local level — frequent cart abandonment, low payment conversion rates due to network instability, consumers’ inability to pay with the right credit card — we can't wrap them in an AI blanket. These problems can only be solved through offering locally-relevant solutions that minimize friction at the checkout.

E-Commerce continues to carve out a bigger and bigger piece of the retail pie every year, yet retailers are still losing $200 billion in potential revenue a year through cart abandonment and checkout friction. These issues loom even larger for retailers that sell into emerging markets. India and Latin America are the veritable “El Dorados” of e-Commerce, with Africa not far behind, yet most online retailers and service providers are not well-versed in how to cater to the populace within these regions. 

There are a number of different factors that cause friction for consumers when they are shopping online — a number of which come down to hubris and laziness on the side of the retailer. Here are a few best practices that will drive conversions at the checkout and maximize your reach:

Don’t display your prices exclusively in U.S. dollars. That will cause confusion for the users resulting in only a fraction of projected sales to you. Instead, list your prices in the local currency and see your conversion rates skyrocket.

Don't restrict payment methods to international cards (Visa, MasterCard, etc.) and ignore local cards and popular payment methods like bank transfers, e-wallets and cash schemes. Some of these local payment methods may seem foreign and cumbersome to you, but they are e-Commerce ready and are very relevant to shoppers in other countries. By adding local payment methods, you could see your revenues double in just a couple of months.

Don’t present everything in English only. Your web content, customer support and chat should all be localized. Make sure your customer support hours are in the local time zone, too.

The effort, I assure you, will be worth it, and the fruits of your labor will be evident. Namely, reduced friction at checkout. A boost to customer loyalty. And the cherry on top, a significant increase to your revenue. 

Online companies leave a massive amount of revenue in customer carts every year. In emerging markets, as much as 80% of the revenue doesn’t even reach the shopping cart because of non-localized checkout — instead it’s pocketed by retailers that are bridging the gap by adapting to the needs and constraints of the local market. Localization of checkout delivers immediate results — it expands reach, reduces friction, boosts your customer loyalty and increases your revenue. All without AI — imagine that! AI might be the word on every business’ tongue, but friction at checkout, especially in emerging markets, is a problem on a basic level. No amount of AI can fix that.  


 

Sebastián Kanovich is a pioneer in emerging markets payments and the CEO at dLocal. He spun off dLocal from AstroPay in January 2016, creating the only 360 payments technology company which handles pay ins and payouts in emerging markets for some of the largest global e-Commerce and marketplace companies. Kanovich holds a Bachelor’s in Economics from Universidad ORT Uruguay. He also studied Entrepreneurship, Innovation and Management of Technology at Tel Aviv University, and completed a prestigious Endeavor Innovation and Growth Program at Stanford Graduate School of Business. He continues to be fascinated with how payments work around the world.

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feed@retailtouchpoints.com (Sebastian Kanovich, dLocal) Executive ViewPoints Tue, 04 Sep 2018 10:08:33 -0400
How A 40M Decrease In Email Promos Increased Revenue At TUMI https://www.retailtouchpoints.com/features/retail-success-stories/how-a-40m-decrease-in-email-promos-increased-revenue-at-tumi https://www.retailtouchpoints.com/features/retail-success-stories/how-a-40m-decrease-in-email-promos-increased-revenue-at-tumi Charlie Cole TUMIWorking to deliver a more relevant customer experience, TUMI was seeking to consolidate business functions “that have a direct relationship with the customer on a 1:1 basis,” noted Charlie Cole, Global Chief eCommerce Officer at Samsonite and Chief Digital Officer at TUMI. “We thought all these functions should live in one place,” he explained, “including online analytics, customer service, sales (retail/online/outlet/drop ship), warranty, repair, email send/open/click, social graph data…”

Finding the right solution was a challenge, Cole explained: “We didn’t necessarily know where in the vendor landscape we were going to end up, so we talked to all sorts of partners, including email, personalization, more traditional CRM, etc.” After a thorough search, Cole and his team landed on the Customer Data Platform (CDP) from AgilOne. In this Q&A, Cole shares his learnings and results from the implementation.

Retail TouchPoints (RTP): What solutions/technologies did CDP replace?

Charlie Cole: A combination of a legacy CRM system and an ESP [email service provider].

RTP: How did you select a CDP partner?

Cole: We looked at approximately 12 vendors in the nebulous space at the time, demo’d all of them, talked to various folks in the industry (not hand-picked references — we did some more prospecting to connect with people), and then compared pricing.  Nothing revolutionary in process, but certainly it was a thorough undertaking by the team that we all felt good about.

RTP: Can you share any results to date?

Cole: My favorite statistic is in 2017 we sent 40 million less emails than in 2016 and made more money.  Our customers are responding to the fact that the stuff they receive is relevant to them as opposed to the traditional batch and blast.  Also, our in store clienteling efforts have benefitted as well.

RTP: Do you believe a CDP approach is right for every different type of retailer?

Cole: Yes.

RTP: Are you doing everything you can at this point with your CDP or will you be looking to expand its capabilities?

Cole: We certainly are not doing everything.  A CDP at its core is really a means to an end. The challenge is to understand all the different application layers that it could enable.  For example, our initial focus was really on messaging.  Now, we are starting to get pretty good on using at as a tool to enable on-site personalization.  Then, how should it be used as a tool to improve customer service?

RTP: Are there any data security or privacy concerns that have come up in discussions about how you’re using the CDP?

Cole: Sure. This should certainly be part of any vetting process.

RTP: Is your use of your CDP affected by GDPR?

Cole: Yes. Where data is stored matters, so we’ve had to work that out.  We incurred some incremental fees here which was a bit of a head-scratcher. 

RTP: Do you have any advice for other retail companies considering a CDP?

Cole: I refer back to the above ‘means to an end’ statement.  Don’t conflate a CDP with customer touch points.  They are two different things.  A LOT of application layers will be beholding to your CDP, but that doesn’t make them the same thing.

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feed@retailtouchpoints.com (Debbie Hauss) Retail Success Stories Fri, 03 Aug 2018 08:09:12 -0400
Marks & Spencer Leverages Predictive Analytics Platform For Buying, Pricing Decisions https://www.retailtouchpoints.com/features/news-briefs/marks-spencer-leverages-predictive-analytics-platform-for-buying-pricing-decisions https://www.retailtouchpoints.com/features/news-briefs/marks-spencer-leverages-predictive-analytics-platform-for-buying-pricing-decisions Marks & Spencer Leverages Predictive Analytics Platform For Buying, Pricing Decisions

Marks & Spencer (M&S), the UK-based department store, has expanded its partnership with First Insight, a platform designed to help retailers make better product development and pricing decisions.

M&S has been using First Insight’s predictive analytics to support design, buying and pricing decisions on categories including apparel, lingerie, footwear, accessories, food, home and beauty. With the platform, M&S can test tens of thousands of products across more than 50 departments and adjust its merchandising process accordingly.

First Insight is designed to use online social engagement tools to gather real-time preference, pricing and sentiment data on potential product offerings. The information is filtered through First Insight’s predictive analytics models to determine which products present the greatest opportunity. The solution is enabling M&S to evaluate a greater number of products and reflect direct consumer input in its buying decisions. 

“Everything M&S does as a company is filtered through the lens of what we know about our customers, and every decision starts with them,” said Gordon Mowat, Director of Supply Chain and Logistics at M&S in a statement. “First Insight’s technology gives us invaluable feedback on new products during design and development, so we can buy more of what our customer likes and eliminate products that score less well.”

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feed@retailtouchpoints.com (Glenn Taylor) News Briefs Wed, 01 Aug 2018 16:46:24 -0400
Top Predictions For AI, Big Data, Pricing By 2025 https://www.retailtouchpoints.com/features/executive-viewpoints/the-father-of-price-optimization-makes-5-big-predictions https://www.retailtouchpoints.com/features/executive-viewpoints/the-father-of-price-optimization-makes-5-big-predictions

0aaKen Ouimet Engage3I’ve been in the retail pricing industry for the past 40 years as an entrepreneur and tech innovator. I wanted to share with you where I think AI, Big Data and Algorithmic Retailing are headed in the next few years, and I’m going to make five predictions about the state of the industry and what it is going to look like in 2025.

[To view the video of Ken’s predictions, go to:

http://www.engage3.com/5-big-predictions-for-the-retail-industry/]

Prediction #1: AI will emerge as your new shopper.

The advent of digitalization has resulted in the explosion of data available to retailers — from detailed store and online transaction logs to competitive pricing data. Companies will have more data than they have traditionally been able to handle. This is the perfect storm for Artificial Intelligence-based technologies, because the more data you feed AI, the better results it will generate. That means that AI is not only going to evaluate SELECT options — it will do what it does best — it will evaluate EVERY option.

Consumers will also have fingertip access to this data. AI will match variables like consumer preferences, location and shopping history to the stores’ product offerings. AI is going to promote price transparency. Price elasticities will go through the roof. Your old heuristic pricing rules will no longer work. Small pricing mistakes will have huge costs. Retailers will begin to differentiate themselves like hedge funds with high-speed pricing models and proprietary market data.  

Prediction #2: Pricing will be personal.

The industry has gone from cost-plus pricing to a dynamically generated model based on many factors like local demand and assortment. The next wave is for retailers to use algorithmic retailing — using advanced analytics to offer personalized pricing. Every customer will be offered pricing that is unique to her. It will be based on many factors that the newest digital capabilities have enabled. Geolocation, for example, can alert a customer to a promo that is available when she is close to her favorite store. This setup not only benefits retailers, it also presents convenience and an opportunity to the consumer to take advantage of savings she would otherwise have missed if she didn’t have access to this information.

At first, personalized discounts will be used to fly under the radar in a price-transparent world. Retailers could bring in customers without lowering prices as a reaction to their competition. Personalized pricing will be embraced as retailers realize its power — to get every price right at every transaction.

Prediction #3: Consumers will embrace service-oriented marketing.

Consumers will use pricing information that will be made available to them and will embrace retailers that listen and understand them. They will gravitate towards retailers that give them better deals on products that they want. This will not only save consumers’ limited time to pay attention to the glut of information, but also save retailers from promoting the wrong products to uninterested clients. Consumers will expect retailers to mine their historical purchases to figure out what they want. They will start to abandon, and lose respect for, retailers that continue to push mass-market offerings at them.

Prediction #4: Product attributes will emerge as the new shelf space.

Consumers are already searching for key attributes, as opposed to specific brands. Sophisticated consumers look for product characteristics like gluten-free, organic and sustainability. They are being educated about new product features that not only take care of their health and well-being, but also that of the planet. Private labels have sprung up as a consequence with multi-tiers catering to different market segments.

Manufacturers will be forced to respond by diversifying their brand investments across other attributes. They will start to compete for product attributes, the way they compete for shelf space today. And both retailers and manufacturers will learn to escape the race to the bottom by leveraging product attributes and market value, and not just compete on price.

Prediction #5: 3D printing will emerge as a new threat to retailers.

3D printing will enable manufacturers to personalize products and distribute them electronically, sometimes right into the consumers’ homes. This technology is no longer limited to small trinkets or custom products. In China last year, for example, a private construction company printed 10 full-sized houses in just 24 hours. The one-story buildings were designed to service offices at a high-tech industrial park in Shanghai.

Products that will be available will initially only be limited to the type of material needed to produce them. Retailers will be forced to figure out how to leverage their broad product portfolios using 3D technology, and stay relevant in that new game.


Ken Ouimet is the Chief Executive Officer & Founder of competitive intelligence & consumer engagement start-up, Engage3 (www.engage3.com). He is credited with creating the retail revenue management and price optimization market with his first company, Khimetrics. Khimetrics led the industry for almost a decade prior to the company’s acquisition by SAP in 2006. Ouimet served on the Board of Directors of Revionics between 2007-2011 and as Chief Scientist & VP of Innovations at SAP AG between 2006-2007.

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feed@retailtouchpoints.com (Ken Ouimet, Engage3) Executive ViewPoints Wed, 25 Jul 2018 09:46:15 -0400
As Tesco And Carrefour Create Strategic Alliance, Will Grocery ‘Price Wars’ Hit Europe? https://www.retailtouchpoints.com/features/news-briefs/as-tesco-and-carrefour-create-strategic-alliance-will-grocery-price-wars-hit-europe https://www.retailtouchpoints.com/features/news-briefs/as-tesco-and-carrefour-create-strategic-alliance-will-grocery-price-wars-hit-europe As Tesco And Carrefour Create Strategic Alliance, Will Grocery ‘Price Wars’ Hit Europe?

European grocery giants Tesco and Carrefour have partnered to “create a long-term strategic alliance” designed to improve product quality and choice and to lower prices for consumers.

The agreement will allow both companies to strengthen their negotiations with their suppliers and create “significant opportunities” for them, according to a joint statement. It will cover joint purchasing of own-brand products and goods not for resale, such as cleaning products or pallets. Each company will continue to work with their supplier partners at a local and national level.

The partnership will last three years, but financial terms of the deal have not been disclosed.

The move comes as European supermarkets continue to consolidate. Sainsbury’s purchased Asda from Walmart for approximately $4.1 billion in May, giving the UK grocers a combined footprint of 2,800 stores. Sainsbury’s held 15.9% of the UK grocery market in the 12 weeks ending April 22, 2018, while Asda accounted for 15.5%, according to Kantar Worldpanel. Combined, this market share would beat Tesco’s 27.6% share in the UK. Tesco acquired Booker, a UK-based food wholesaler and convenience store operator, for $4.7 billion in November 2017.

In the wake of the merger, Sainsbury’s said it plans to cut prices on many popular products by 10%. Price decreases at Sainsbury’s and Tesco-Carrefour could create a “price war” similar to that in the U.S. between Amazon, Walmart, and other grocers such as Kroger and Albertsons, especially since low-price competitors Lidl and Aldi have rapidly expanded throughout Europe. While lower prices would be a win for the consumer, both retailers (and their supply chains) would feel the pressure of lower profit margins.

The Tesco-Carrefour partnership could bring total savings of £400 million ($528 million), with Carrefour standing to benefit more given its lower margins, according to Jefferies analyst James Grzinic.

The partnership will be formalized within the next two months, according to the statement.

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feed@retailtouchpoints.com (Glenn Taylor) News Briefs Mon, 02 Jul 2018 10:21:33 -0400