The document discusses the changing landscape of price transparency and its implications for retailers' pricing strategies. It notes that with the rise of online shopping and price comparison tools, the high-low and everyday low pricing models will become ineffective as price transparency increases consumer price elasticity. Retailers need to verify their assumptions about competition, shopping behaviors, and how consumers obtain price information. They will also need to adapt by focusing on fewer key competitors and items, narrowing price gaps, strengthening value perceptions, and employing dynamic pricing. The document advocates investing in predictive competitor pricing tools to gain visibility into prices and develop more robust pricing optimization strategies in this new environment.

1. Brought to you by:

3. Agenda
1. Stress Testing Your Pricing Strategy
2. A Market with Greater Price Transparency
3. Adapting to the New World of Price Transparency
4. How Retailers Can Unlock a Competitor’s Playbook

4. Stress Testing Your
Pricing Strategy
Bill Bishop
Chief Architect, Brick Meets Click

5. How are you Managing Price?
Key Competitors
KVIs
Gap Management
Value Offering
● Focus on several
● Broad, but not deep
● ~3,500 – 4,000
● Center-store only
● Within 10%
● Little focus on PPU
● Commonly 20% - 40% above
comp.
Today

6. How are you Managing Price?
Private Label
Price Communication
Price Transparency
● Gaps averaging 30%+
● Little focus
● Blend into décor
● Shoppers must find values on
their own
● Little transparency
● Infrequent price checks
(quarterly/monthly)
● Selected items only
Today

7. Have you updated your assumptions about
pricing practices?
#1: Who is the competition

8. Have you updated your assumptions about
pricing practices?
#2: How customers decide where to shop

9. Have you updated your assumptions about
pricing practices?
#3: Where customers get their price info

10. Have you updated your assumptions about
pricing practices?
#4: How much customers spend on food

11. What’s Your Online Pricing?
● Store specific prices
• Online purchases
• Product
• Services

12. Key Takeaways >>>
● Pricing practices vary widely
● Shifting shopping patterns requires
verifying assumptions
● When pricing extends online, it gets
“more interesting”

13. A Market With Greater Price
Transparency
Ken Ouimet
CEO & Founder, Engage3

14. Where did the book store go?

15. Mobile has bought the Internet in-store.
Be prepared for deep
and rapid change!

16. Online Price Comparison Engines

17. In-Store Comparison Engines

18. What does it mean?
● HI-LO model will be ineffective
● EDLP will be difficult to achieve
● Price elasticities will increase
dramatically
● DON’T discourage crowdsourcing and
showrooming

19. Key Takeaways >>>
● Price transparency is here. Accept it!
● Find an alternative to the HI-LO and
EDLP pricing models. Prepare now!

20. Adapting to the New World of
Price Transparency
Bill Bishop
Chief Architect, Brick Meets Click

21. So what happens when price becomes
transparent?
● Greater pressure on margins
● Price leadership is riskier
● Competition is harder to
identify
● Speed is more important
than precision

22. How Will You Manage?
Key Competitors
KVIs
Gap Management
● Focus on 1 or 2
● Overall and by category
● ~250 SKUs (all) + personalized KVIs
● Total store
● Within 5% on identical items
● Premium for differentiated items
Tomorrow
Value Offering ● Strong value offering
● Economy PL
● Neutralize PPU gap

23. How Will You Manage?
Private Label
Price Communication
Price Transparency
● Gaps averaging 20%
● Strong focus
● Cohesive program
● Educates shopper about how to work the system
● Transparency
● Real time
● All items
Tomorrow

24. Key Learnings from online pricing
● Be a “fast follower” – not a “price leader”
● Need to develop “known value categories”
● Dynamic pricing helps:
• Increase purchases
• Maintain margin

25. Key Takeaway >>>
It’s never been more important to
Invest margin dollars
where you can drive
profitable sales

26. How A Retailer Can Unlock
Their Competitor’s Playbook
Ken Ouimet
CEO & Founder, Engage3

27. Competitors’ Pricing
● Everything you assumed about your competition
is no longer valid
● Today, retailers are blind to over 99% of
competitors’ prices
● Your survival requires a broader, deeper and
more dynamic understanding of the competition

28. Price Optimization (Today)
Pricing Strategy
Pricing Rules
Price
Optimization
(P*)
Online Prices
Shelf Prices
Promotional Prices
Comp Pricing
Blind to 99%

29. Crowdsourcing
Benefits
● Lower Costs
● Increase Coverage
● Control Quality

30. Predictive Comp Pricing
Competitor Pricing
Strategy & Rules
Comp Price
Model & Forecast
Accuracy
Soft Drinks ±4.3%
Dairy ±3.8%
Laundry ±1.2%
Comp Price
Sampling Optimization
Forecasts
vs.
Actual Prices
Online Prices
Shelf Prices
Promotional Prices

31. Price Optimization (Predictive)
Pricing Strategy
Pricing Rules
Price
Optimization
(P*)
Online Prices
Shelf Prices
Promotional Prices
Comp Visibility
1%

100%
Predictive
Comp Pricing

32. Key Takeaway >>>
● We are entering a period of deep and
rapid change
● You can’t afford to be 99% blind
● There is huge first mover advantage.
The technology is here today!

33. Q&A

34. THANK YOU!