In a recent article appearing in the WSJ, entitled “In Retail, Data Elbows Aside Chief Merchants”, an argument is made in favor of displacing a merchant’s intuition with algorithms in order to spot trends. While we respect the position, we favor a slightly more “people-centric” view.
Retail remains fundamentally a human business. Merchants have made a career out of understanding their shoppers and delivering a merchandising experience which connects with shoppers, delivers value and drives loyalty. That is the art – priceless! However, margins are under pressure in an increasingly competitive omnichannel retail environment where assortments have expanded within an “endless aisle”, made available through mobile technology. That is where the science can help.
So are retailers jumping on the science-driven bandwagon? Apparently not, according to the data. In the 2014 holiday season, there was a 187 percent increase among retailers that price matched, according to Internet Retailer. And this year? It appears it will be more of the same, with retailers, again, “racing to the bottom.” Just recently Target stated that it “will match online prices with more than two dozen online competitors, including Amazon.com and Walmart.com.”
And, we expect to see more such announcements. It is considered by some as a competitive imperative. Here’s the bottom line: indiscriminate price matching is neither sustainable nor necessary. Today, right now, tools are available for merchants to chart a more fact-based customer-centric strategy for prices and promotions. Retail price optimization software and promotion pricing software are in the tool bag and vital to developing profitable retail pricing strategies. Consider the following perspectives:
- It’s Easily Systemized. Evolved pricing and merchandising solutions help merchants spend their “highest and best use” on sensitive, image- and brand-centered items, and help systematize the bulk of pricing/promotion decisions, most of which require little or no strategic input.
- Forget “What We Did Last Year.” Today’s retail science measures promotional effectiveness in new ways so that merchants can master their promotional strategy. The science delivers “what and when to promote,” plus “what are the right channels?”
- Avoid the Myth of Big Data Nirvana. We all like to talk up big data, but it isn’t a cure-all that stands alone. Exception-based analytics, sitting on top of big data, are required so merchants can be laser-focused on real problems and real opportunities. Read our blog“Merchant Intelligence: Send more information; less data!
- Blog Post: Where are retailers losing money?
- Whitepaper: Exercising Price Leadership
- New Video: Retail Price Strategy & Cost Changes
Our blog commitment is to provide useful, thought-provoking perspectives and resources for retailers. Please send your thoughts or comments to me directly at firstname.lastname@example.org.