Mark Schwans, Vice President of Marketing at Clear Demand, emphasizes the importance of modernizing pricing strategies for retailers, especially grocers, in 2025 in this exclusive article in Retail Technology Review.

As the New Year begins, it’s the perfect time for reflection and renewal. For regional retailers – especially grocers – this is the time to reimagine strategies and embrace new tools to thrive in a competitive market.

Every inch matters regarding revenue, profit, and market share in today’s landscape. Price is a critical driver but a balancing act, juggling customer loyalty, competitive pressures and profitability.

Many businesses still rely on outdated methods like spreadsheets, siloed strategies, and labour-intensive manual processes to set prices. These fragmented approaches create inefficiencies and lead to costly mistakes. The new year brings an opportunity to resolve persistent challenges like mispriced items, reactionary pricing, and pricing uncertainty. These issues aren’t merely operational annoyances – they undermine customer trust, profitability and growth.

To tackle these problems, retailers need more than instinct, ad hoc tactics, or grit. While those attributes may have served them in the past, they don’t hold up in a rapidly shifting market. Today, retailers require a cohesive pricing strategy powered by modern tools that foster data-driven decisions. 

So, why not make a pricing makeover part of your 2025 resolutions? 

Resolve to Create a Cohesive Pricing Strategy

Disjointed pricing approaches create inefficiencies that weigh down operations, alienate customers, and diminish your brand. Conversely, the opposite provides lasting benefits and customer trust – Walmart and Amazon are the prominent Everyday Low Priced (EDLP) retailers, and shoppers know that.

Establishing a cohesive pricing strategy is the first step. Retailers must define target customers, identify primary competitors, assign category roles, and specify key value items (KVIs). Pricing tactics should execute against the category role. Traffic Drivers can be heavily promoted and include loss leader items with more aggressive pricing to attract customers.

In contrast, convenience categories typically feature items with higher profit margins. However, even within a category, retailers must account for variations in their KVIs and subcategories. Otherwise, they risk overly discounting some items and overpricing others, causing them to lose profits and customers. 

Embrace Modern Solutions for 2025

The ideal solution provides enterprise-grade sophistication without the complexity. Businesses can regain pricing control by automating rules, streamlining price optimization, and out-maneuvering their competitors. Critical functionality should consider:

A Robust Rules Engine

1. Rules that are purpose-built to address complex retail assortments with unmatched flexibility and precision for pricing the entire store across multiple locations and competitors.
2. The solution must accommodate global rules, store groupings, individual store-specific rules, and differentiation by brand and item.
3. It must allow users to effortlessly prioritise rules and competitors during price optimisation while maintaining complete visibility into the impact of business rule compliance on key metrics such as revenue and profit.
4. Users must be able to see the cost of compliance with their rules regarding revenue and profits and evaluate if softening the rule will improve overall results.

Optimisation with Proven Demand Modelling

1. No more guessing. Sales histories are utilised to calculate the elasticity of demand for every item, recommending prices to maximise impacts and find that sweet spot between max revenue and profit. Whether it’s a new promotion or responding to a competitor, these insights keep retailers ahead of the game.
2. Perfect data cannot be expected to yield results. The solution must be able to infer out-of-stocks without compromising elasticity calculations. It must also use AI techniques to improve model accuracy, compensating for missing data and data anomalies while evaluating multiple leading indicators on demand, such as the weather and other prominent events.
3. Prices and promotions optimisation decisions can no longer be done in silos. Only by looking at the two together can retailers fully optimise their prices.

A Streamlined Approach to Efficiency

1. Automation reduces common pricing headaches – no more mispriced items or delayed cost-change reflections. With the right pricing solution, retailers have more bandwidth to focus on the most impactful decisions while eliminating reactive decision-making.

Overcoming the Fear of Change

The New Year often brings excitement for change but also apprehension. Retailers may worry about disrupting their routines or learning new systems. Yet the cost of staying the same far outweighs the effort of moving forward. A pricing provider eases this transition by supporting retailers with change management resources, helping them adapt smoothly and confidently to modern practices.

Change can often be overcome by finding opportunities for improvement by:

• Starting small: Focus on optimising high-impact categories for quick and measurable returns.
• Thinking big: Establish the foundation for a unified, data-driven pricing strategy that benefits the entire organisation.

A Fresh Start for Retailers

As you enter 2025, consider pricing transformation more than just a resolution – it’s an opportunity to shape a profitable future. Find a solution with customisable rules, automation, and price optimization to remove uncertainty from pricing and turn it into a competitive advantage.

Let this New Year be the one where outdated spreadsheets are replaced with intelligent systems, fragmented strategies give way to unified approaches, and pricing becomes a driver of success. Start the year strong and make pricing innovation your first step toward achieving your business goals in 2025.