Brexit holds many uncertainties but there is one near-certainty: grocers, particularly those relying on goods from EU states, will face rising costs at a time of heightened competition from discounters and online, with shoppers more price-sensitive than ever.
As rising costs begin to make their way through the supply chain, along with an unsustainable squeeze on margins and profits, how can grocers implement a more strategic approach to pricing that keeps the focus on value and customer loyalty while delivering sustainable results?
Firstly, retailers must respond with agility to market developments. Grocers can now monitor competitive price changes and shopper buying behaviour with real-time analytics. Combining these insights with rules-based pricing and automated workflows enables grocers to adapt strategy and execute price changes more rapidly with precision and confidence without hurting margins.
Second, performing thorough key value item (KVI) and elasticity analysis can give retailers insight into the items where price truly matters to your shoppers - versus items that conversely can help recover margins. Understanding the respective roles of own-label and branded items in price image also sharpens focus. Market basket analysis can pinpoint item affinities so grocers can craft promotions that increase shopper traffic and drive top and bottom-line results.
Rising costs may prompt pressure to raise prices at the same time that competitive actions may tempt a kneejerk cost-cutting response. Progressive retailers conduct on-demand what-if scenario analysis to understand the impact a potential price change will have on units, margins and profits before implementing any changes.
Finally, retailers have to be willing to adapt and evolve their price strategy. The value of more sophisticated, data-driven pricing rules and workflows is to bring price strategy to life at the shelf. Retailers should continually assess the need to adjust the relative emphasis on revenues vs margins vs competitiveness at the item, category, department, zone or banner level.
Anastasia Laska is VP product strategy and solutions marketing, EMEA, at Revionics
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