Not long ago, my son needed some supplies for a school project. It was a busy day and this was something we needed to find quickly.
When I was younger, that would’ve meant driving to the nearest office supply store and hoping they had what I needed. Instead, I got online. Surprisingly, the nearest store with the items wasn’t an office supply retailer, but a grocery store. Not only that, but the grocer’s prices were competitive.
What might have once been a two-hour search from one store to another turned out to be a quick 10-minute trip. The grocer won my business because they were more convenient, and also because I knew their price was fair.
These are the kinds of shopping journeys your customers make every day, and in every case your customer is in control: shopping on multiple devices, comparing prices and searching out the best promotions. Price isn’t the only factor customers consider, but it’s a key factor. And maintaining loyalty means giving them not only convenient, no-hassle shopping, but a competitive price that reflects the market.
Finding the Best Price
Unfortunately, during the past two years we’ve seen many examples of what happens when retailers aren’t able to rationalize their pricing and promotion strategies to keep up with the realities of today’s world.
Online marketplaces like Amazon are taking guesswork out of shopping by showing the range of available prices for a product, along with specific fulfillment timeframes and inventory levels. A lot of people prefer ordering from Amazon because it’s so easy to do, even if the price isn’t any lower than what they’d pay at a brick-and-mortar store.
Simply matching competitors’ prices isn’t enough. Instead, you have to know how customers react to your pricing and promotions, which in turn lets you create demand forecasts that take the effects of price adjustments and promotions into account. Today’s software allows you to do this more accurately, and more quickly, than ever before.
Promotions: A Holistic Exercise
Meanwhile, customers remain hungry for deals. But if you plan a promotion and don’t have enough inventory – or if you plan one, but don’t set right price – or if you create a promotion that doesn’t account for what’s happening in other departments – then your promotion might fall flat with customers.
This is where retailers face another challenge: planning promotions that create value for the whole store while still offering the best value to customers. You can only do that when you’re able to see past departmental silos and know how promotions are impacting your supply chain. Without enough product pre-positioned to meet customers’ needs, a promotion could bring shoppers into your stores only to find empty shelves waiting for them. Those shoppers, once bitten, are probably going to be shy about coming back the next time there’s a sale.
Again, today’s technology gives retailers the power to get a holistic view of how a promotion impacts both the customer and the business. You can analyze the impact of pricing and promotions to understand how an offer builds or cannibalizes a basket. What’s more, technology can help reveal whether the items you might want to promote in one department are the best candidates for promotion across the business to maximize your opportunity and profit.
Making Better Decisions
The answers to these challenges will not come through scenario-based price and promotion optimization software. The winners in retail are leveraging technology to understand consumer preferences and competitive conditions as inputs to their plans, while positioning the right inventory quantities, competitive prices and promotions across their entire business.
Retailers must make more localized, personal and relevant choices that address shoppers’ needs and wants at the moment of the purchase decision. All of this is happening behind the scenes, but it results in the competitive prices and engaging promotions that help customers make the best decision – and choose your brand.
Click here to learn how technology is driving retail’s evolution – and how JDA is helping retailers meet the challenge.