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A DemAnDTeC CusTomer suCCess sTory                                      The Price is Right at H-E-B                       ...
CusTomer suCCess sTory       Capitalizing On a Complementary Relationship and Proven Technology       Keeping in mind the ...
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DemandTec Customer Case Study: HEB


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DemandTec Customer Case Study: HEB

  1. 1. A DemAnDTeC CusTomer suCCess sTory The Price is Right at H-E-B with Consumer Demand Management from DemandTec Promoting Old-Fashioned Values In a Modern, Competitive Retail MarketplaceCusTomer overview Key to H-E-B’s success is its reputation for consistently low pricing. Over the last few years, H-E-B’s pricing came under increased pressure when giant discount retailersChallenge entered its markets. To help offset this competition, H-E-B partnered with DemandTec inTo thwart the advances of giant order to provide the merchandising team with a powerful set of pricing retailers, leading grocerystore chain H-E-B needed a more Reacting to a more complex competitive pricing environment proved to be a challengestrategic pricing system to support for H-E-B’s legacy pricing applications. H-E-B’s existing pricing system, a library ofits evolving business strategy spreadsheets, made it difficult to define competitive pricing strategies and quickly execute accurate prices across hundreds of stores and tens of thousands of products. Whilesolution H-E-B was working on its next set of prices, competitors would preempt those movesA comprehensive Consumer with yet another set of price changes. “Pricing data is highly perishable,” explains MarkDemand Management (CDM) Bradshaw, Director of Strategic Pricing, H-E-B. “With our previous spreadsheet system,enterprise software solution from we could react to information, but sometimes not until after our competitors had changedDemandTec their pricing strategies.” In addition, H-E-B’s legacy systems were unable to model andKey Benefits forecast consumer demand, or provide insight into strategic considerations such as theAbility to simulate and predict optimum price differential between its private label products and leading national brands.complex pricing strategies prior to Nor could the legacy systems systematically track pricing inconsistencies such as if aimplementation, achieve business particular smaller-sized item was a better deal than the larger size of the same product.rules compliance, meet financial As a result, prices started to fall out of alignment with H-E-B’s overall merchandisingobjectives, and continually strategy.enhance customer satisfaction Keeping Competitors at Bay With a Next-Generation Pricing Systemand price reputation Retailers can gain a huge advantage over their competition with an ability to accurately forecast and shape consumer demand. To maintain its competitive position – and protect its long-standing price reputation with its customers – H-E-B needed a pricing solution that would enable it to precisely forecast demand, consistently enforce complex pricing rules, and support its dual objectives of delivering great value for its customers while achievingCompAny snApshoT its business objectives for market share and financial performance. To meet thesen Revenue challenges, H-E-B turned to DemandTec. “H-E-B evaluated several software vendors and $14.2 Billion chose DemandTec because of the features and functions provided by the DemandTecn Market Sector Lifecycle Pricing solution,” says Scott McClelland, Division President, H-E-B. “DemandTec Grocery differentiates itself from competitors by providing scaleable software and sophisticated science that enable our merchants to develop superior merchandising strategies.”n Geography Adds McClelland, “We’ve partnered with DemandTec for over three years now, and are Over 300 supermarkets in the extremely pleased with the quality of the results that our teams have delivered to the Southwest U.S. and Mexico business.”
  2. 2. CusTomer suCCess sTory Capitalizing On a Complementary Relationship and Proven Technology Keeping in mind the primary goals of enforcing H-E-B’s pricing rules and aligning prices with the competitive strategy of each category, DemandTec’s software platform analyzed two years of point-of-sale (POS) data to provide H-E-B with a detailed forecast about “With the simulation how each of the company’s pricing rules would impact consumer demand and financial capabilities of the DemandTec performance of every item in every store. The solution also analyzed every possible solution, we were able combination of rules, items, zones, and time periods, enabling H-E-B to run virtually unlimited “what if” scenarios to simulate various competitive strategies and the resulting to predict how we could impact on the business. simultaneously increase This ability to simulate complex pricing strategies and assess their impact on volume and our gross margin dollars financial performance prior to execution is critical in helping H-E-B make more informed, and achieve our desired accurate decisions. Bradshaw explains, “To try to improve our price performance against competitive position – the competition in a particular product category, we determined that using our previous which amounted to a major manual spreadsheet method would have meant a considerable financial investment on H-E-B’s part. But with the simulation capabilities of DemandTec solution, we were able to improvement in our business.” predict how we could simultaneously increase our gross margin dollars and achieve our Mark Bradshaw desired competitive position – which amounted to a major improvement in our business.” Director of Strategic Pricing H.E. Butt Grocery Company Additional Benefits for H-E-B H-E-B is also using the predictive capabilities of DemandTec software to help its procurement department lower the total cost of goods. “When one of our suppliers “DemandTec differentiates informed us of a cost increase on a key product, we were able to use the software to itself from competitors simulate various pass thru scenarios and determine the best way to reflect the cost by providing scaleable increase on the shelf,” says Bradshaw. “Also, by using the software and working with the suppliers ahead of a cost increase, our business development managers were able to software and sophisticated better negotiate cost terms. This saved H-E-B a significant amount of money, while also science that enable our maintaining volume goals for the vendor. This amounts to a win-win-win situation – the merchants to develop superior consumer, the supplier, and H-E-B all benefit.” merchandising strategies. With its sophisticated modeling and forecasting capability, and dynamic rules management We’ve partnered with functionality, DemandTec’s software allows H-E-B to effectively and profitably compete DemandTec for over three with larger discount retailers without matching prices item for item – something that H-E-B was unable to do before implementing DemandTec software. To extend these years now, and are extremely capabilities into other merchandising processes, H-E-B is currently evaluating pleased with the quality of the DemandTec’s promotion and markdown applications. According to Bradshaw, “I see results that our teams have significant opportunities in using a common platform to predict and improve our promotion delivered to the business.” and markdown pricing strategies. This approach will enable H-E-B to manage the entire pricing lifecycle from one integrated system.” Bradshaw explains, “We are also looking to Scott McClelland Division President DemandTec to help us evaluate market-basket data, assess key value items in a category, H.E. Butt Grocery Company and determine optimal zoning strategies. With this level of understanding around consumer demand, we can write merchandising strategies to make better business decisions.” Learn More About DemandTec For more information on how you can partner with DemandTec, call 1.650.645.7100 or visit DemandTec, Inc. One Franklin Parkway, Building 910 n San Mateo, CA 94403 tel 650.645.7100Copyright © 2011, DemandTec, Inc. All rights reserved. Printed in the USA. DemandTec and the DemandTec logo are registered trademarks of DemandTec, Inc. www.demandtec.comAll other trademarks mentioned in this document are the property of their respective owners. 08/11