Make Three Huge Saves with a Price Intelligence Solution:
Gone are the days where it took days or even weeks to find out how the competition was priced. Retailers can no longer afford to employ outdated strategies related to the collection and analysis of pricing data. Technology has changed the game and it’s time for organizations to step up and start embracing price transparency. In my view, there are three big saves that an organization can make by implementing a price intelligence solution. These saves may end up being the difference between an organization winning or losing, not only at the pricing game, but at the overall business.
1) Time and Resource Allocation
Many retailers are still employing outdated tactics to stay on top of what their competition is doing. They are using internal resources to search the web to find pricing discrepancies. Some retailers use core-merchandising personnel to perform this task, taking them away from some of the key merchandising responsibilities they should be dedicating their time to, like building relationships and networks with partners and suppliers, or properly forecasting what quantities to buy.
The problem is accentuated by the fact that this this task is no longer one that can be scheduled and planned in advance, making resource assignment very difficult. Retailers can change their price within seconds, either on the web or in store. This makes it extremely difficult for a manual checks-and-balance system when it comes to monitoring the competition. It is nearly impossible to stay on top of what is out there, let alone ahead of your competition if you are constantly relying on manual processes.
A price intelligence solution can aid buyers, merchandisers and senior managers to monitor key items, allowing them to make quick and informed decisions on some of their volume items or big sales drivers. Via a price intelligence solution, decision makers can gain quick insight into what is happening in the market and direct his or her team more effectively. This leads to quicker and more informed pricing decisions.
2) Sales and Margin Dollars
A price intelligence solution can help improve your organization’s bottom line. It can also help you become a more nimble retailer. Imagine your organization employs a manual process with regard to competitor monitoring. It is late Friday afternoon and Amazon just dropped their price by $200 on a specific TV. In your lineup, this particular item represents 30% of the total sales in the TV category. Let’s suppose you reviewed Amazon’s website in the morning and the price change occurred in the early afternoon. Since you do not go back and review Amazon again you do not catch this pricing change. This miss could really hurt your sales.
I have seen examples where this has happened and organizations miss out on hundreds of thousands of dollars in sales because they did not react to a competitive issue and lost sales as well as their consumers’ trust. A price intelligence solution can extract real-time price information from your competitors and ensure that you are not eroding your bottom line by missing out on important pricing information. You will also be able to customize your pricing solution to alert you or the key stakeholders in your organization when prices do change so even if you do decide to leave early one Friday afternoon for example, you will not be at a disadvantage.
A price intelligence solution can help in your budgeting and preparedness as well as enable you to take better control over your category or department’s overall margin. By reviewing pricing both in near real time and historically, you can make margin decisions based on fact and not assumption. You will be able to use pricing information to enhance margin when your pricing is too low. If your organization employs a competition or market-based pricing strategy, you will be able to clearly see where you need to respond to competition or where there is opportunity (i.e. implementation of a 24 or 48 hour online promotion)
“Someone’s sitting in the shade today because someone planted a tree a long time ago” is a quote from famous billionaire investor, Warren Buffett that resonates strongly with me. It can be interpreted in a few different ways; however I see it as a good analogy to explain that opportunism and hard work fuel long-term success and prosperity.
Companies spend millions of dollars working and countless hours building their reputation and working to achieve a defined corporate culture. However, I believe that the retailers who survive and thrive are the ones that pay attention to small details and ultimately ones that stay true to all of the values embedded in their corporate culture. Reputations and values that took years to construct can be slowly be destroyed if the detailed people and tools are not put in place to withhold them
So what does this have to do with price intelligence? In my opinion, it is quite simple. A retailer who does not pay attention to their core values will find it hard to succeed..Pricing is instrumental as it is one of the most-widely criticized and talked about values by the consumer. Just think of how often you receive a call from a friend or family member, gloating about the great price they paid on a certain item or about how they could not believe that a certain retailer was priced the way it was on an item, while the competition has the same item for a price 20% lower.
It is essential to implement price intelligence, especially when your core messaging and value statement is centered on your pricing strategy. To illustrate, suppose your organization is marketed as an everyday low price (EDLP) retailer and you are consistently being beaten on key items because you ‘assume’ you have the lowest prices in the market. Without an accurate tool to help you understand what is actually happening in the market, you may be doing more harm than just eroding your profits on an item or in a particular category. You may actually be slowly changing the culture of your organization.
It is important to have an accurate price intelligence solution like the one 360pi can offer in order to ensure you maintain the integrity of your organization and guarantee that your core messaging and value statements are plausible. If they are not, then it involves changing the way your company thinks and ultimately conducts business. A pricing strategy must be implemented with your corporate culture in mind. It is a fundamental part of an organization’s success. An article written in the MIT Sloan Management Review clearly outlines how important pricing is to an organization. It states that new pricing approaches frequently require new organizational priorities, a new organizational structure, new capabilities, new processes and tools and different goal and incentive systems. Culture may just be the biggest save you can make….
Make Three Huge Saves with a Price Intelligence Solution is the second instalment of a multi-part series. To start at the beginning, read A Buyer’s Tale about Price Intelligence