TOUGH LOVE: An In Depth Look at Retail Pricing Practices

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5-9_calendar_template_Pricing continues to change the face of retail — for better or worse. Price transparency is still at the core of this revolution, so how are retailers responding?

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TOUGH LOVE: An In Depth Look at Retail Pricing Practices

  1. 1. TOUGH  LOVE:    An  In  Depth  Look  at  Retail  Pricing  Prac=ces    #360pricing  Sponsored  by  
  2. 2. #360pricing  Type  ques=on  here  Welcome  Webinar  A8endees  
  3. 3. #360pricing  Follow  This  Webinar  On  Twi8er  #360pricing
  4. 4. #360pricing  About  Retail  TouchPoints  ü  Launched in 2007ü  Over 26,000 subscribersü  To provide executives with relevant,insightful content across a variety ofdigital mediumFree subscription to our weekly newsletter:WWW.RETAILTOUCHPOINTS.COM/SIGNUP
  5. 5. #360pricing  Panelists  Nikki BairdManaging PartnerRSR ResearchDebbie HaussEditor-in-ChiefRetail TouchPointsMODERATORJenn MarkeyVP, Marketing360pi
  6. 6. Tough Love: An In Depth Lookat Retailers’ PricingPractices: Benchmark 2013NIKKI BAIRDMANAGING PARTNERMAY 2013
  7. 7. What Is RSR?•  Market Intelligence, focused on retail•  Context: the business challenges & opportunities that drivetechnology investments•  Pragmatic insights•  Powered by extensive retail experience•  Fueled by a deep bed of research data•  We help retailers keep their IT strategies aligned with corporateobjectives•  We help solution providers align their products and messageswith retailers’ needs7Tough Love: An In Depth View at Retail Pricing Practices
  8. 8. Our BOOT Methodology8They sell more “stuff” but… they also think andact differently than their competitors.Retail Winners: Year-over-year comparable storesales outperform inflation.BusinessChallengesOpportunitiesOrganizationalInhibitorsTechnologyEnablersTough Love: An In Depth View at Retail Pricing Practices
  9. 9. Respondent Profiles (Pricing 2013)Responses received from 134 respondents, January-April 2013•  Revenue•  37% Tier 4 (Less than $50m/year)•  19% Tier 3 ($51m - $249m/year)•  11% Tier 2 ($250m-$999m/year•  15% Lower Tier 1 ($1b - $5b/year)•  18% Upper Tier 1 (More than $5b/year)•  Performance•  20% Below average•  45% Average•  35% Above average•  HQ•  66% North America•  16% Europe•  2% UK•  9% Asia Pacific•  2% Latin America•  5% Middle East/Africa9Tough Love: An In Depth View at Retail Pricing Practices
  10. 10. Respondent Profiles (cont.)•  Retail Presence•  94% North America•  26% Europe•  15% UK•  20% Asia Pacific•  15% Latin America•  22% Middle East/Africa•  Products Sold•  31% Fashion, Short Lifecycle or Seasonal•  27% Durable Goods or Consumer Electronics•  27% Basics or Replenishment Goods•  15% Perishables10Tough Love: An In Depth View at Retail Pricing Practices
  11. 11. The Top 5 Things RSRLearned AboutPrice Intelligence1.  Price sensitivity of consumers continues to drive retailers’priorities when it comes to pricing practices2.  Competitive response is still fierce3.  A large number of retailers continue to believe they can win onprice alone4.  Retailers are starting to figure out showrooming – the bestresponse? To “be competitive”5.  Lack of clean data is inhibiting retailers’ pricing capabilitiesBonus Learning:As pricing matures, retailers intend to more deeply integrate allkinds of data elements into price decisions11Tough Love: An In Depth View at Retail Pricing Practices
  12. 12. Price Sensitivity &Aggressiveness18%9%27%22%47%42%51%67%13%21%25%25%33%34%40%41%57%Respond to segment blurring (competition comingfrom unexpected places)Need to provide more localized pricingNeed to provide consistency in price acrosschannelsIncreased promotional intensity of competitorsIncreased price transparency – the impact ofcomparative price shoppingNeed to protect our brand’s price imageNeed to get better return on our inventoryinvestment through pricingIncreased pricing aggressiveness from competitorsIncreased price sensitivity of consumersTopThree (3) Strategic Pricing Business Challenges2013 2012N/A12Source: RSR Research, April 2013Tough Love: An In Depth View at Retail Pricing Practices
  13. 13. Winners Seek Brand ProtectionLaggards Look Over theirShoulders1328%39%56%11%17%13%39%45%29%29%6%22%25%28%47%Respond to segment blurring (competitioncoming from unexpected places)Increased price transparency – the impact ofcomparative price shoppingIncreased pricing aggressiveness fromcompetitorsNeed to provide consistency in price acrosschannelsNeed to protect our brand’s price imageBusiness Challenges - Differing by PerformanceRetail Winners Average Performers LaggardsSource: RSR Research, April 2013Tough Love: An In Depth View at Retail Pricing Practices
  14. 14. Competitive Vulnerability Topsthe Chart in all Categories1464%44%67%53%24%56%38%40%48%24%29%40%Fashion/Seasonal Basics/Replenishment Durable Goods & ConsumerElectronicsPerishable goodsTopThree (3) Difference by Sub-verticalIncreased price sensitivity of consumers Increased pricing aggressiveness from competitorsNeed to protect our brand’s price imageSource: RSR Research, April 2013When asked about their position on commoditization and margin erosion, 55% report“We have to operate within an extremely price competitive environment” – far morethan any other issue – including the impact of price transparency.Tough Love: An In Depth View at Retail Pricing Practices
  15. 15. Laggards Hope to Lead with Price1565%36%28%59%56%66%Laggards Average WinnersTop-3 Pricing Opportunities:The Winners PerspectiveImprove top-line sales Improve marginsSource: RSR Research, April 2013Tough Love: An In Depth View at Retail Pricing Practices
  16. 16. Figuring Out ShowroomingAs more and more retailers encountershowrooming, their confidence inwhat to do about it seems to increase.Biggest differences:•  Laggards drive the "Ignore it" category:18% vs. 9% of Winners. Laggards arealso more likely to price match - 24% vs.16% of Winners.•  Average performers are most likely to becompetitive - 42% vs. 38% of Winnersand 29% of laggards.•  Winners are most likely to say theyhavent seen any showrooming yet - 34%vs. 18% of average performers and 29%of laggards.•  Average performers appear to be gettingsqueezed - they aren’t necessarilypositioning themselves against laggardsas low price competitors, but they dontnecessarily have the service or messageelements that help them justify not pricematching.169%11%43%26%7%12%39% 39%14%17%27%38%Ignore it Price match We havent seen ityetBe "competitive"Mobile Price ComparisonPolicies2011 2012 2013Source: RSR Research, April 2013Tough Love: An In Depth View at Retail Pricing Practices
  17. 17. What’s Getting in the Way?1729%31%31%34%34%40%42%42%The possibility of negative customer reaction tochanges in our pricing strategyResistance to change from MerchandisingWe can’t execute at the level of granularity thatpricing solutions provideLack of coordination with MarketingChannel organizational structure makes it difficult tocoordinate pricing strategies across channelsLack of the right skill setsResistance to change from Stores or other channelsLack of clean price, competitor and purchase dataTopThree (3) Organizational Barriers Impacting Ability toImplement More Effective Pricing PracticesSource: RSR Research, April 2013Tough Love: An In Depth View at Retail Pricing Practices
  18. 18. Pricing is No Longer An Island1815%21%26%33%23%28%41%44%33%14%19%24%28%32%35%42%44%51%Best practices for managing channel conflict ofpricesLine of business leaders to help change ourbusiness processesPilot programs in specific stores or regionsBetter communication and education of resistantparties or organizationsBetter training to improve pricing skill setsTailor a technology solution to my businessprocess and needsBusiness process analysis for pricing processimprovementBuild up progressively more sophisticated pricingcapabilities over timeImproved integration technology toolsTopThree (3) Ways to OvercomeThese Barriers2013 2012Source: RSR Research, April 2013Tough Love: An In Depth View at Retail Pricing Practices
  19. 19. Nikki Baird:nbaird@rsrresearch.com1-303-683-6613Denver, CO, USA19Thank You!www.rsrresearch.comTough Love: An In Depth View at Retail Pricing Practices
  20. 20. <#>  PLACEHOLDER"Polling Question"Tough Love: An In Depth View at Retail Pricing Practices  
  21. 21. <#>  Achieving
Omni-Channel Success with 
Price Intelligence "Jenn Markey
VP, Marketing
360pi"  
  22. 22. <#>  Pricing Enters the C-Suite"Tough Love: An In Depth Look at Retail Pricing Practices"19#Double dip recessionAmazonTechnologydisruptionOmni-Channel#
  23. 23. <#>  Price needs to reflect brand"Tough Love: An In Depth View at Retail Pricing Practices"Everyday  Low  Prices   Premium  Pricing  Price  +  Customer  Experience  =  Brand    Brand  consistency  =  Omni-­‐Channel    20#
  24. 24. <#>  Consumer Electronics – Hit Hardest by Showrooming"Source: Placed - Aisle to Amazon StudyTough Love: An In Depth View at Retail Pricing Practices"21#
  25. 25. <#>  Consumer Electronics: Price Sensitivity & Volatility"Product:  Samsung  UN55EH6000  55-­‐Inch  LED  HDTV  Timeline:  Q4,  2012  (Oct  1-­‐Dec  31)  Compe=tors:      •  Best  Buy  Canada  •  Best  Buy  US  •  Future  Shop  •  Amazon  US  •  Amazon  US  Marketplace  •  Sears  Canada  •  Sears  US  •  Frys  Electronics  22#BlackFridayFull Competitive Pricing#ReportAvailable at:#www.360pi.com#
  26. 26. <#>  Dealing with Price Sensitivity & Volatility"Tough Love: An In Depth Look at Retail Pricing Practices"Need  accurate  real  ]me  view  into  compe]tors’  pricing      23#
  27. 27. <#>  Easier said than done"Tough Love: An In Depth View at Retail Pricing Practices"24#
  28. 28. <#>  Manual efforts prone to error & delay"58%52%54%36%13%0%4%7%Fashion/SeasonalBasics/ReplenishmentDurable Goods & Consumer ElectronicsPerishable goodsGathering Competitive Price Intelligence DataNot currently using it Its a manual processTough Love: An In Depth View at Retail Pricing Practices"Good  candidates    for    360pi’s  Automated  Price  Intelligence  25#
  29. 29. <#>  How do we get it?"Tough Love: An In Depth View at Retail Pricing Practices"26#
  30. 30. 360pi Retailer Advantage"Product  Price  Purchase  Tough Love: An In Depth View at Retail Pricing Practices  360comparables360price360mobile27#
  31. 31. <#>  Multi-Faceted View of Price"Tough Love: An In Depth View at Retail Pricing Practices"28#
  32. 32. <#>  Don’t get left behind"Tough Love: An In Depth View at Retail Pricing Practices  29#
  33. 33. <#>  Next Steps"Best practices and thought leadership content to helpyou on your price intelligence journey.
360pi.com/resources/discovery-center "Modern Retail Pricing is our blog and covers new trendsand insights into retail pricing. Subscribe today!
blog.360pi.com"See our product in-action and discover what it can do foryour business. Request a free demo!
360pi.com/free-demo"Tough Love: An In Depth View at Retail Pricing Practices"30#
  34. 34. <#>  Contact Me"Jenn  Markey  VP,  Marke]ng  360pi    j.markey@360pi.com  1.855.360.0075  (toll-­‐free)  @360_pi  Tough Love: An In Depth View at Retail Pricing Practices"31#
  35. 35. #360pricing  Type  ques=on  here  Q&A    //    Submit  Your  Ques]ons  
  36. 36. #360pricing  Q&A    //    Panelists  Nikki BairdManaging PartnerRSR ResearchDebbie HaussEditor-in-ChiefRetail TouchPointsMODERATORJenn MarkeyVP, Marketing360pi
  37. 37. #360pricing  Thank  you  for  a8ending!  Download  this  presenta]on  at:  hKp://rtou.ch/360pricingweb  

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