With industry heavyweights including RIS News’ Joe Skorupa, EKN Research’s Sahir Anand, Revionics’ Cheryl Sullivan and MGM Resorts’ Steve Schnur all participating, it’s no wonder we had such a great discussion going during the recent Webinar, “5 Critical Components of Advanced Pricing: How to Turn Consumer and Market Data into Actionable Insights.”
Sahir, who is VP Research and Principal Analyst at EKN, kicked us off with a list of Top Merchandising Challenges identified by retailers in a survey conducted by EKN. The #1 challenge they identified is “Lack of consumer insights in the merchandising process.” Rising from #10 a year ago to #3 is “Too much generic merchandise.” With unprecedented amounts of consumer and event data now available, what’s keeping retailers from gaining consumer insights and presenting very targeted assortments?
We know that customer-centric pricing and promotions deliver proven business impact – Sahir noted incremental sales of 1-3% for the former and 3-6% for the latter with incremental gross profits at nearly double that percent – why wouldn’t every retailer implement advanced technologies to dynamically price using usable insights?
Meaningful consumer insights come from applying sophisticated analytics and predictive capabilities, which gives retailers true understanding of their customers. Mix in the agility to act quickly on those insights, and you get dynamic pricing – which retailers name as one of their top 3 initiatives this year. In fact, Sahir notes that analytics in pricing delivers a 30-50% improvement on KPIs.
Cheryl, Revionics’ SVP of Product Strategy, noted that you need to be targeted and strategic in responding to competitor and customer behaviors – or you risk getting caught in the race to the bottom. Intelligent analytics can show you when customers or competitors change, and good science can tell you when and how you should respond, and when you shouldn’t need to respond. She also cautioned that the concept of dynamic pricing has different price change frequencies for different retailers; it is not a one-size-fits-all proposition.
As a retailer operating more than 150 stores across MGM Resorts properties, Steve Schnur, the Director of Merchandise Planning, Analytics and Pricing, has to manage “everything from Rolaids to Rolexes.” His team uses analytics to differentiate between the “need” and the “want” items, since price strategies are different for the two categories. Demographics vary widely across the differing MGM properties, and within a single property demographics may be extremely different during various on-property events. Steve turns to analytics and dynamic pricing to tailor accordingly. At the end of the day, he notes, “Good pricing focuses on optimizing the guest experience while protecting the bottom line.”
For us the takeaway is that retailers overwhelmingly feel the imperative for data-driven customer insights and responsive pricing – and the business benefits are undeniable. If you’re looking for actionable insights from industry innovators to move your business forward on these critical initiatives, we urge you to catch the on-demand Webinar for yourself. And we also urge you to download our eBook on getting dynamic pricing right.