5 Ways to Win the Price Sensitive Consumer [For Retailers]

5 Ways to Win the Price Sensitive Consumer

Speakers

Nikki BairdManaging PartnerRSR Research

Tony TomanekSenior Product SpecialistBest Buy

Drew WilliamsVP, Marketing360pi

Mark EmondPresidentDemand Spring

5 Ways to Win the Price Sensitive Consumer #5WaystoWin

Join the Conversation

#5waystowin

The Challenge of the Price Sensitive Consumer

NIKKI BAIRD

SEPTEMBER 2012

My Job Today: Context• The world of pricing today: A study in

contradictions

• Throw in:

• Increasing promotion intensity• Channel conflict & transparency

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Downward Pricing Pressures

6

Need to provide more localized pricing

Respond to segment blurring (competition coming from unexpected places)

Increased promotional intensity of competitors

Need to provide consistency in price across channels

Need to protect our brand’s price image

Increased price transparency – the impact of comparative price shopping

Increased pricing aggressiveness from competitors

Increased price sensitivity of consumers

7%

16%

6%

28%

11%

38%

46%

14%

10%

32%

32%

38%

40%

48%

58%

9%

18%

22%

27%

42%

47%

51%

67%

Top Three (3) Strategic Pricing Business Challenges

2012 2011 2010

Source, RSR Research, April 2012

Even in a continued improving economy, Retailers obsess on the race to the bottom

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Mobile Price Comparisons: Mixed Messages

7

Beat it

Ignore it

Price match

Be "competitive"

We haven't seen it yet

6%

9%

11%

26%

43%

2%

7%

12%

39%

39%

What is Your Policy for Responding to Mobile Price Comparisons in Stores?

2012 2011


Oddly, the one place retailers do NOT race to the bottom

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The Volume of Price Changes Continues to Rise

8

Increased significantly Somewhat increased Stayed about the same Decreased

38% 38%

22%

2%

32%30%

28%

9%

61%

27%

12%

0%

How Has the Number of Price Changes Sent to Stores and Other Channels Changed Over the Past Three (3) Years?

2012 2011 2010


76% of all respondents continue to increase the number of price changes sent to stores and other

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Promotions as a Way of Life

9

We have become more focused on everyday low prices

Our strategy has not changed

We have become more focused on key items

We have become more promotions driven

11%

16%

26%

31%

10%

15%

15%

40%

12%

16%

18%

41%

How Has Your Company's Pricing Strategy Changed Over the Past Three (3) Years?

2012 2011 2010


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The Impact of Channel Proliferation Grows

10

Channel-specific promotions

Web as lowest price

Channel-specific pricing (web-only or store-only)

Returned to one price

No impact

14%

6%

16%

10%

30%

12%

14%

19%

21%

26%

How Has Channel Proliferation Impacted Your Pricing Strategies?

2012 2011

• # of retailers returning to a single price has doubled, from only 10% to a fifth of respondents.

• 34% of respondents report that their zone pricing plans have been damaged by consumer price transparency.

• Fashion retailers lagging behind in adjusting pricing strategies. Twice as likely as the overall to report channel specific pricing and promotions

• None say the web has the lowest price


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Commoditization and Margin Erosion Hits Retailers Hard

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It's getting too easy for consumers to find competitive prices

We offer premium service that justifies premium prices

Consumers don't care about brands

The complexity of pricing and promotions creates unexpected conflicts and margin erosion

We offer premium brands that justify premium prices

We have to operate within an extremely price competitive environment

11%

11%

33%

44%

26%

5%

5%

16%

47%

7%

7%

14%

21%

21%

29%

Impact of Commoditization and Margin Erosion on Retailers

Retail Winners Average Performers Laggards


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Winners Grabbing New Sources of Information

12

Agree Neutral Disagree

62%

31%

8%

17%

56%

28%33%

44%

22%

"We are Collecting Data from New Channel Promotions and Using it to Make Better Pricing

Decisions"



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We’re Running Lots of Promotions, but……

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50%43%

7%

33%

50%

17%11%

22%

67%

Agree or Disagree: My Company Feels Confident that our Promotions are Effective Overall



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A Few More Words About Promotions

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15%

63%

22%

My company currently targets our promotions at the appro-

priate level of granularity


20%

39% 41%

We have effective policies in place to manage different prices and promotions across channels

and touch points


37%34%

29%

We have processes in place to manage promotional planning across the various organiza-

tions within our companyWith all these

price changes and promotions, you’d expect someone to be a bit more

confident


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Principles to Keep in Mind

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Principles to Keep in Mind

• Simple does not mean clear

• Trust is hard to earn and easy to break

• Blurring between online and store when it comes to price – the store no longer stands alone

• There are two components to price transparency that are often overlooked:

• Availability of the item – both overall and the logistics of getting it• Reputation of the competitive price – a 5 star seller vs. a 1 star

seller

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Emerging Best Practices

1. Understand the impact of price decisions

2. Don’t price match – change the game

3. Set a reasonable number of price changes each week

4. Understand channel impact

5. Obtain a multi-faceted view of price

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Thank You!Nikki Baird: [email protected] 303-683-6613

Newsletter

Subscribe:

Further Information on Products & Services: [email protected]

www.rsrresearch.com

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mailto:[email protected]


5 Ways to Win the Price Sensitive Consumer

Drew WilliamsVP, Marketing

360pi

What do we do?

Retail price intelligence solutions

for complete visibility and

smarter price decisions.


Why does Price Intelligence Matter?


What can you do?


Multi-Faceted View of Price – 3 Inputs

Smarter Price

Decisions

Competitive Price

Intelligence

Demand Elasticity

Inventory Availability


Competitive Price Intelligence – What will the Market bear?

Smarter Price

Decisions

Competitive Price

Intelligence

Demand Elasticity

Inventory Availability


How do we get it?


5 Ways to Win with Price Intelligence

• Gain complete visibility• Adjust according to your pricing strategy• High-level and product-level views


Set more competitive prices.

At-A-Glance View of Prices


High-Level View

Product-Level View

Product-Level View of Prices


High-Level View

Product-Level View


• Improve negotiating position with manufacturers

• Hold competitors who violate Minimum-Advertised-Price (MAP) policy accountable


Improve margins & lower prices.

Time to chat with BowerRetailer is consistently overpriced compared to competitors on this particular manufacturer


Identify MAP Violations


• Gain insight into competitors’ product assortment

• Discover products your competitors are carrying that you are not

• Optimize product according to near real-time data



Optimize product assortment.

Improve your product assortment.


Improve your product assortment.


Improve Product Assortment



• Ensure your prices are in fact the lowest

• Increase conversions• Ensure that manufacturers are

providing real promotions


More Effective Promotions.


Make more informed decisions.

• Isolate the issues on why you are losing a customer. Is it:• Price?• Assortment?• Other?


Summary


Make more informed decisions.

More effective promotions.

Optimize product assortment.

Improve margins & lower prices.

Set more competitive prices.

Contact Me


[email protected]+1 416-300-0543@360_pi



April 12, 202340Confidential – Best Buy internal use only. Do not copy, publish, or distribute. The material in this document is confidential to Best

Buy.

BEST BUY SDF &COMPETITIVE PRICE INTELLIGENCE

41April 12, 2023

WHAT IS BEST BUY SDF?

• Assortment has nearly tripled in size over the past two years

• Ultimate inventory and replenishment model for the online space

Confidential – Best Buy internal use only. Do not copy, publish, or distribute. The material in this document is confidential to Best Buy.

• Supplier Direct Fulfillment• Orders shipped directly from manufacturer/distributor• Expanded assortment

• Assortment extends beyond traditional CE categories, including: • Furniture• Sporting Goods• Toys & Games

CHALLENGE

• Expanded assortment significantly, but prices were not competitive

• Competitively shopping only 7% of total assortment

• Previous price intelligence tool only provided match rate of only 25% – 30%

42April 12, 2023


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SOLUTION


• Find a better price intelligence solution

• Improve accuracy

• Competitively shop more of the assortment

44April 12, 2023

HOW ARE WE LEVERAGING PRICE INTELLIGENCE?

1. Competitively shopping entire assortment, with a very high match rate

2. Price matching categories across entire assortment

3. Influencing pricing decisions across internal business teams

4. Provides a different perspective on promotions and their effectiveness


45April 12, 2023

THE FUTURE OF PRICE INTELLIGENCE AT BEST BUY

1. Competitive pricing intelligence is an important element of a larger, comprehensive pricing strategy

2. Other elements include:• Inventory Levels (both online and in stores)• Page Traffic• New Categories


3. The ideal price intelligence solution is dynamic & takes the following factors into account:

•Competitive Pricing•Inventory Levels•Page Traffic•Profitability

Q&A

Nikki BairdManaging PartnerRSR Research

Tony TomanekSenior Product SpecialistBest Buy


Mark EmondPresidentDemand Spring


Thank-You!


Questions?Email [email protected]


Technology

5 Ways to Win the Price Sensitive Consumer [For Retailers]