Setting Prices & Pricing Data Are Top Challenges Retailers Cite In RSR “Tough Love” Survey

Breathing down every retailer's neck in 2013 is online retail competition growing by double-digits, eCommerce surging ahead of brick & mortar and becoming more effective; and the use of more effective tools for meeting and beating the competition. In my previous blog post on RSR's Tough Love, An In-Depth Look At Retail Pricing Practices, I talked about how 60% of RSR survey respondents said "improving margins" was their top retail pricing challenge, and they were focused on acquiring the tools to aid them in improving margins. Here's what the retailers said were the organizational barriers impacting their ability to implement more effective competitive pricing strategies:  

 Top 3 Organizational Barriers Impacting Ability To Implement More Effective Pricing Practices

Source & Permission: RSR Research, April 2013

In citing their Top Three Organizational barriers impacting ability to implement more effective pricing practices, 42 percent of respondents cited the lack of clean price, competitor and purchase data; and 42% cite resistance to change from stores or other channels, as well as 40% citing the need for better skill sets to improve execution. The puzzling aspect, according to the RSR Research, a plurality of respondents report they can neither predict the impact of price changes they make, nor truly analyze the effectiveness of those price changes after the fact. Twenty-nine percent, the lowest choice, said they're worried about "the possibility of negative customer reaction to changes in our pricing strategy."  I'm sure they're cautious about pricing strategy changes after seeing what happened at JC Penneys.

Top Three Operation Challenges In Setting Prices

Source & Permission: RSR Research, April 2013

Operation Challenges Cited By Respondents Include:   

1. Forecasting the impact of potential pricing -- 48%

2.  Measuring the impact of executed pricing -- 45%

3. Maintaining visibility into promotional -- 37%

4. Making sure that stores change prices - 35%

After that, of more importance to those of us in the pricing solution business, is "getting access to robust competitive price data", cited by 27% as one of their top three challenges. Then, "inability to effectively manage all pricing rules" - 24%.

Pricing Data Elements: Value Vs. Use

Source & Permission: RSR Research, April 2013

The Value Vs. Use Pricing Data Elements & Customer Data Elements that were of interest to us:

Competitors' prices - Very Valuable, 60%,; Major Role, 49%.

Customer purchase history - Very Valuable, 54%; Major Role, 38%.

Market Basket data - Very Valuable, 49%; Major Role, 28%.

Customer demographics - Very Valuable, 40%; Major Role, 29%.

Then the respondents switch emphasis, citing the following as playing a major rather than very valuable role:

Current inventory levels - Very Valuable, 39%; Major Role, 49%.

Planned inventory levels - Very Valuable, 38%; Major Role, 44%.

Customer sentiment gathered from socal media -- Very Valuable, 25%; Major Role, 13%.

Bottom Line For Your Bottom Line: 

Retailers need pricing technology/pricing intelligence tools and assortment solutions to know what's happening in the marketplace; to know what your competitors are doing; and to know your competitors' assortment. To help guide your company to pricing for profit, I prescribe price monitoring softwarecompetitive price analysis, and product assortment intelligence solutions

"You can't be competitive if you don't practice competitor price monitoring, check your competitions' prices every day, and price right." (Gilon)   

In their RSR study, Nikki Baird and Paula Rosenblum note a kind of dissociation, in that retailers don't have a lot of information about the potential impact (results) of changes to price, and they also lack retail data analysis with which to predict the actual impact of tactical price changes. "What we hope retailers will consider instead (of focusing on promotions)," say the study's authors, "are some key ways they can turn pricing into a strategic advantage." 

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Gilon Miller, CMO

About Author

Gilon is a seasoned marketing, sales and business development executive with over 15 years of experience in the software and Internet business. He is the Founder and CEO of GuruShots. Previously, Gilon was the CMO of Upstream Commerce, VP of Marketing at iMDsoft and Director of Global Marketing at SAP. He earned an MBA at the MIT Sloan School of Management and a BS in Electrical Engineering from Tufts University.
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