Forrester’s new report ‘Top 10 Questions About Retail Pricing Solutions’ looks at how retail pricing intelligence is fast becoming a standard competitive tool for both pureplay online and multichannel retailers. In this blog, we look at why retailers who want to better compete in the marketplace need to be using retail pricing intelligence as part of their competitive toolkit.
An increased number of competitors, a higher number of SKUs, as well as growing consumer price transparency have all made strategic competitive positioning much harder to manage. Nearly one out of every four customers now actively engage in showrooming as part of their in-store shopping experience, with 41% purchasing with another retailer who may offer a better price.
A tipping point has been reached
As a result of this ever-growing complexity, retailers can no longer reasonably monitor and respond to the vast number of factors that will influence a customer’s decision to buy – especially true given the different pricing strategies that may exist between online and brick-and-mortar stores, as well as zone pricing.
Retailers still using ‘gut-feel’ pricing are at a significant disadvantage against competitors who are using real-time algorithms and big-data-driven insights “to win the wallet of the customer.”
Competitive pricing solutions such as Profitero’s are one of the technology tools that retailers can use to better support the management, monitoring and maintenance of online and in-store prices. Through utilizing big data architecture and real-time processing power (Profitero collects online data on more than 275 million products across 4,000 online retailers daily), retailers can now more easily track and report on competitor prices, as well as gain visibility into a competitor’s in- or out-of-stock position on any given product.
The lowest price or the right price?
As we discussed in an earlier post, it’s not always about retailers delivering the lowest price but about achieving the right price for the desired strategic outcome. For example, key value items (KVIs) should usually be priced more competitively as they are often subject to greater elasticity. If a retailer can identify those items, it then empowers the retailer to create pricing strategies for groups of items that are the most price-sensitive to consumers.
Evaluating a price intelligence solution
To prepare for the next-generation of big data pricing, Profitero advises retailers to:
1. Align the company culturally around the importance of data. Many retailers leap to the technical requirements to get started, but our experience is that a cultural shift is equally or more important.
2. Carry out a basic assessment of desired and current analytical capabilities. What insights and intelligence are desired but not currently accessible? Wherever possible, these insights should be linkable to actions to be taken by specific functions.
3. Evaluate solution providers and partners. In the field of competitive price intelligence there are several solution providers, and the right fit depends on many factors including your objectives, requirements, and budget.
Download this Profitero White Paper to understand the five important questions you need to ask a prospective vendor when considering a pricing intelligence solution:
- How precise and accurate is your product-matching process for identical and similar items?
- What scale of monitoring is possible?
- How long does the setup process take?
- How robust is reporting?
- What resources will I need to invest to use the solution?
Profitero is the leading global provider of online insights and eCommerce intelligence for brands and retailers, collecting online data on more than 275 million products every day.
We provide both brick & mortar and online retailers with their competitors’ prices, promotions and full product assortment information. More than 50 global retailers, including Staples, Waitrose, Ocado, Morrisons, Walmart-owned Sam’s Club and Worten, rely on Profitero’s accurate and timely competitor price intelligence to make better informed and more profitable pricing decisions, helping them to increase sales as well as margins.
Profitero also supplies brands with critical online insights, helping to enhance their online sales and market positioning. We deliver key online metrics, including share of online shelf, share of voice, pricing, brand price monitoring and new product monitoring, in any country and from any online or multichannel retailer, updated every day.