As the market changes and competition grows, one area is becoming more of a focus for retailers than ever before, and that’s price optimization. How do we think about price optimization and what makes it so important?
Read on for five quotes from three pricing experts who will make you think more about your own price optimization strategy:
What makes pricing so important?
Greg Girard, Program Director at World-Wide Omni-Channel Retail Analytics Strategies at IDC Retail Insights explains why pricing is important and breaks down price optimization into a simple definition.
“Pricing is just one demand lever that retailers can use to spur profitable demand. It needs to be coordinated and applied with the retailer’s approach to merchandising, assortment optimization, localization and how to drive within the context of how they’re marketing and positioning themselves,” Greg explains.
How do we define price optimization?
“Price optimization consumes data and data is essential from a variety of different types,” Greg shares. “It applies forecasting in a variety of machine learning (ML) and optimization sciences – setting processes for logical product groups (assortments, product lines) across times (season/week/month), across locations (price zones) and across all touchpoints online and in-store.”
What changes in technology are re-shaping price optimization?
“The iPhone is emblematic of the consumer-facing transformational technologies: social, mobile, big data and analytics and even artificial intelligence (AI) that is now commonplace in the digital assistance we use as we go through life: Cortana, Siri, Alexa and Google Home,” Greg explains.
JoAnn Martin, JDA’s Vice President of Retail industry sees on-demand technologies creating seismic shifts in consumer behavior and expectations.
“There’s been a lot of changes within the retail industry,” JoAnn explains, “think about the emergence of Uber and Amazon and the way they’ve changed customer behavior and think about the impact of surge pricing and connecting demand. We’re seeing disruption in three major fronts: from the customer, from technology and from competition. No place is bigger in pricing than competition.”
How does AI change the way we look at pricing and demand?
Daniel Gruessing, Principal Consultant at Blue Yonder, a JDA company explains:
“We look at how the historical demand looked in the past and combine it with many other influencing factors from what we derived from the retailer data and external sources. We are interested in the cause and effect that the change in price has on demand – we have to execute every factor, coupon, promotion, climate, weather, holiday, anything that’s derived from competition or just calendar affects. These effects are individualized by product.”
Ready to learn more? Tune into our latest pricing webinar.
Listen to these experts and bonprix’s Florian Rüffer share everything you need to know about the latest changes in pricing. Learn the impact AI and ML are having on retailers in a competitive industry and look at targeted promotions and strategic pricing strategies that are making retailers more competitive now. Listen to our latest webinar, The Right Price at the Right Time.