1. A DemAnDTeC CusTomer suCCess sTory
Giant Food Stores Prices the
Entire Store with DemandTec
Giant Increases Efficiency and Effectiveness in Pricing, Promotion,
and Deal Management
CusTomer overview Giant Food Stores, LLC, a division of Ahold USA, traditionally had a narrow, but consistent
Every Day Low Price (EDLP) strategy that it applied across most products. The
Challenge
company’s 30 year old, labor intensive pricing and promotion systems could no longer
Giant needed more flexibility in
its ability to execute pricing and keep pace with the sheer number of pricing decisions in a rapidly changing market,
promotion strategies, and it needed and these systems limited the company’s ability to execute more sophisticated pricing
to keep pace with a flood of cost and strategies. Company executives recognized that a new solution would boost efficiency
competitive changes in a fast-moving and help the company stay ahead of its competition.
market.
Because they support 30 different price zones covering 147 stores, the pricing team
solution potentially faced 30 different variations of every decision it made. Adding complexity to
DemandTec Lifecycle Price this scenario was the growing amount of competitive data Giant collected and the degree
Optimization™ and DemandTec End- of cost-volatility in the market, which made those decisions even more daunting and
to-End Promotion Management™ overwhelming.
Key Benefits According to John Lerch, Director of Retail Pricing at Giant, “It wouldn’t be unusual to
n Pricing team productivity more
execute 40,000 to 100,000 pricing decisions in the course of a week’s time. This was a
than doubled
daunting task using their legacy manual systems, which required a human decision for
n Specific pricing actions are better
aligned with corporate pricing every SKU in every price zone.”
strategy Giant was interested in more consistently executing its pricing strategy based on a
n Results of pricing rule changes
definitive set of rules. It kept many of the rules on paper, others were only managed in
and promotions are accurately
people’s heads, and some weren’t documented well enough to help ensure sustainability
forecasted before new prices hit
the shelves over time. The company also had no means to reliably forecast the impact of rules
n Streamlined deal management changes on its business before prices hit the shelves.
process improved efficiency and
In addition to the pricing challenges, promotion planning and forecasting were being
reduced errors
n Benefits can be rolled into
performed manually – a very time-intensive, cumbersome activity for Giant merchants.
lower consumer prices – further Vendor deal management added similar burdens, as the paper-intensive and error-prone
improving competitiveness processes consumed resources.
CompAny snApshoT “I had a very significant backlog of pricing projects,” says Lerch. His team recognized that
with its restrictive legacy tools, it had no chance of completing routine pricing execution
n Revenue
$4.3 Billion work, much less pursuing higher-level goals. “Unless we were to nearly double our staff,
we would not have been able to catch up with that.”
n Industry Segment
Grocery Embarking on a Path of Innovation with DemandTec Solutions for Pricing
and Promotion Management
n Geography
As Giant surveyed the market for a solution, DemandTec stood out as the company that
147 supermarkets in Pennsylvania,
could truly partner with them to meet their current and future needs. Scalability was one
Maryland, Virginia, and West
Virginia under the Giant Food driver in their decision. DemandTec had proven that its solutions could handle massive
Stores, Martin’s Food Markets, and amounts of point-of-sale and competitive data, it could easily handle the large numbers of
Food Source banners price changes Giant faced, and it could do so without the need to increase staffing levels.
www.demandtec.com

2. CusTomer suCCess sTory
The company also responded favorably to the solutions’ ease of use, particularly the way
it allowed merchants to codify pricing rules using simple, straightforward sentences rather
than relying on technicians to interact with the system. The clincher was DemandTec
solutions’ forecasting capabilities, which allowed merchants to predict the impact of
pricing changes and new promotions and to make changes before prices hit the shelves.
Giant chose to implement DemandTec Lifecycle Price Optimization™ for the entire store,
including perishables. “DemandTec benefits our
company because it makes
Streamlined Pricing Processes Bring Greater Agility and Improved
Sales Performance us more efficient, so that
“Since implementing DemandTec solutions, Giant has seen significantly enhanced we can remain a low cost
productivity and efficiency,” Lerch says. The company is now able to respond to all vendor operator. Being a lower cost
cost changes and competitive actions on a weekly basis, instead of having to react to operator allows us to be more
them as resources became available. That in itself has made Giant more agile. Gains so
aggressive at the shelf as far
far have been accomplished without increasing staff, effectively boosting productivity to
as price and promotions are
at least twice what the team had previously managed. DemandTec’s solutions have also
concerned, which is better for
made it easier to take advantage of more margin enhancement opportunities, and staying
in close compliance with Giant’s pricing strategies has resulted in a measurable sales our customers.”
benefit.
By automating the pricing process, DemandTec solutions have removed the burden of
“With DemandTec, we can
repetitive pricing minutiae and freed the pricing team to work more strategically. The
select the best way to
move has also reduced the need to constantly reprioritize projects to ensure that they
can be completed. The focus now is on continually tuning Giant’s strategy to maintain structure a vendor deal to
profitability while satisfying its customers and maintaining its price image. maximize the benefit in terms
of sales, margin, and volume
More Profitable Promotions with Greater Efficiency
Giant chose to implement the complete DemandTec End-to-End Promotion performance so that the
Management™ solution, including the Deal Management software service, to help the vendor is satisfied, the retailer
company streamline its trade funds presentation, negotiation, and reconciliation process. is satisfied, and ultimately the
Today, 98% of Giant’s vendor deals are negotiated via the Deal Management service
customer is satisfied.”
on the DemandTec TradePoint Network™. According to Lerch, “With DemandTec, we
John Lerch
can evaluate a number of different alternatives for a promotion to maximize the benefit Director of Retail Pricing
in terms of sales, margin, and volume performance so that the vendor is satisfied, the Giant Food Stores, LLC
retailer is satisfied, and ultimately the customer is satisfied. We can ensure much more
reliable execution, utilize fewer resources against that promotion, and end up with a better
promotion in the first place.”
Lerch concludes, “DemandTec benefits our company because it makes us more efficient,
so that we can remain a low cost operator. Being a lower cost operator allows us to be
more aggressive at the shelf as far as price and promotions are concerned, which is better
for our customers.”
Learn More About DemandTec
For more information on how your company can work with DemandTec, call 888.676.3626
or visit www.demandtec.com.
DemandTec, Inc.
1 Circle Star Way, Suite 200 n San Carlos, CA 94070
tel 650.226.4600 n fax 650.556.1190
Copyright © 2008, DemandTec, Inc. All rights reserved. Printed in the USA. DemandTec and the DemandTec logo are registered trademarks of DemandTec, Inc. DemandTec www.demandtec.com
Lifecycle Price Optimization, DemandTec TradePoint Network, DemandTec End-to-End Promotion Management and the DemandTec Platform are trademarks of DemandTec, Inc.
All other trademarks mentioned in this document are the property of their respective owners.
09/08