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How will you Prepare for Q4 this Year?

Former Costco Merchandiser, Frank Fotia, discusses pricing for the all-important Q4 Holiday Shopping Season.

As many buyers start to focus on Q4 product assortment and forecasting, it is important for retailers to ensure that they be proactive in the way they plan their overall business strategy for this time period. Pricing is core to this overall strategy.  For those retailers whose product offerings are centralized in price sensitive categories like consumer electronics and home improvement, this is especially critical.

The graph below from a survey done by Gartner proves that quite a small percentage of Tier 1 retailers  (less than 15%) are actually rating themselves capable of using technology to execute their pricing strategy or to monitor competitor pricing.



So why aren’t major retailers taking ownership of this side of the business? Is it simply that they do not have the internal resources in place to process and decipher this data or is it that there is simply no strategy or thought behind this process in the first place? There are a variety of reasons and even more speculation, but now is as good a time as ever to start re-thinking or developing a pricing strategy. It is also time to make a conscious decision about what tools and technology are necessary to maintain and develop a pricing strategy.

In the over-saturated market (especially the online one), retailers need to continue to differentiate. The latter sounds like just another buzzword that is continuing to lose meaning.  However, In the most ‘showroomed’ categories of consumer electronics and home improvement, nearly 40% of the total respondents in the Gartner survey say they did not purchase from the retailer they used to showroom the product as they believed online retailers have better pricing.



As retailers start planning product assortment for Q4, it is especially important that they also develop a strategy on how they will address competitor pricing.  This includes proper planning and decision making regarding who their true competitors are, what percentage of products they want to constantly evaluate (and why?) and budgeting for price changes. Budgeting may be particularly difficult if the retailer has no historical data to assess past trends. On the flip side, not addressing pricing at all could be detrimental.

Major events such as Black Friday and Christmas emphasize the fact that retailers, especially those concentrated in industries such as consumer electronics where showrooming and price sensitivity is at its highest, need to be disciplined and look at ways to leverage competitive data. This competitive data needs to be used strategically. It does not always constitute lowering price or racing to the bottom on margin, but it should encourage retailers to be creative. This creativity can take the form of a daily deal or flash sale, strategic email marketing campaigns and better SEO campaigns. The figures from Gartner serve as a reminder that more retailers need to focus on price intelligence and data to keep customers engaged and loyal. With a critical time of the year approaching and the economy only showing extremely moderate growth, now is the time for retailers to be proactive.

Source: Survey Analysis: Focus on Customer Basics to Challenge Amazon, as ‘Showrooming’ Is Universal but Not Unbeatable, Feb 12, 2013, Robert Hetu, Gartner


In all, 10,530 qualified respondents worldwide participated in this study. The 10 countries covered were the U.S. (N = 1,050), Canada (N = 1,047), the U.K. (N = 1,050), Germany (N = 1,050), France (N= 1,050), Japan (N = 1,050), Brazil (N = 1,127), Russia (N = 1,047), India (N = 1,048) and China (N =1,011).

About the Author
Francesco is a former consumer electronics (CE) buyer, with years of experience at a successful multi-billion dollar retailer. He offers first-hand knowledge on how to convert price intelligence into practical and value- added merchandising strategies and concepts. Currently, Francesco is 360pi’s retail industry lead, and is an ongoing contributor to Profitable Insights, focusing on the various ways to leverage price intelligence to help increase margins, sales and market share.