50% of RSR “Tough Love” Pricing Survey Respondents Evaluating “Rules-Based Pricing Engine” As Tech Solution

The most recent RSR Research Study, "Tough Love, An In-Depth Look At Retail Pricing Practices," examines what retailers think they need in order to be more competitive and successful in the marketplace. Looking at the section on Pricing Technology Solutions, 50% of the respondents indicate that they're in the process of evaluating and selecting a rules-based pricing engine as one of the "tools and techniques to manage the pricing process". (Note: This 50% figure is from the group identified by RSR as "laggards" -- slow adopters, less successful business numbers, etc.). Only 8% of "winners" indicated that they are evaluating/selecting a rules-based pricing engine, presumably because they've already got one -- or have already done their homework.

In August 2012, I wrote about Why Pricing Technology Tools & Assortment Solutions Are Vital for Retailers Today. At that time, retailers were recognizing the need they had to evaluate, acquire and utilize pricing technology tools. It seems that day has come, says RSR.  

Here's the 2013 RSR Graph On Evaluating/Selecting Solutions 

 

Source & Permission: RSR Research April 2013  

This is where 50% of the respondents in the "laggards" category indicate that they are looking at, considering, or evaluating a rules-based pricing engine. 

Other categories that are important from a pricing and assortment intelligence viewpoint include inventory management/availability as a price driver; regular price optimizationregular price planning, forecasting, and management; price intelligence; rules-based pricing engine; and end-to-end price lifecycle management

My point is that if retailers "price right" and price more efficiently through the necessary use of pricing and assortment intelligence solutions, will they diminish the need to worry as much about promotions and markdowns after the fact?

The RSR Figure on 2013 Pricing Technology Adoption 

 Source & Permission: RSR Research April 2013 

While the Pricing Technology Adoption category allowed answers for "Fully Deployed, Piloting/InRollout, Evaluating/Selecting, Exploring/ Budgeting, and No Plans, let's take a look at the breakdown in the "fully deployed" column.  It appears that when it comes to "Fully Deployed", less than one-third have deployed customer data warehouse; and ten percent end-to-end price lifecycle and management, and Markdown optimization.  (In case the numbers are hard to read):

Fully Deployed: 

Customer data warehouse - 33%

Product movement data warehouse - 30%

Regular price planning, forecasting - 29%

Promotions planning, forecasting and management - 26%

Regular price optimization - 23%

Inventory management - availability as a price 19%

Rules-based pricing engine -18%

Markdown planning, forecasting, and management - 16%

Price intelligence - 13%

Promotion optimization - 12%

End-to-end price lifecycle management - 10%

Markdown optimization - 10%

 Here's the 2013 Solutions "Fully Deployed" Category Broken Down Between "Winners" and "Laggards"

Source & Permission: RSR Research April 2013 

"Solutions Fully Deployed" compares winners' and laggards' degree of deployment of solutions. Winners lead laggards in customer data warehouse, product movement data warehouse, regular price planning, forecasting, rules based pricing engine, regular price optimization; and inventory management - availability as a price.

Promotions planning, forecasting, and management is the category where laggards lead, with 25% vs. 22%. Then the pendulum swings back to winners where the majority highlight price intelligence and end-to-end product lifecycle management. The rest is close between both winners and laggards on markdown planning, forecasting and management, promotion optimization and markdown optimization.

Bottom Line For Your Bottom Line:

One of the reasons RSR principles Nikki Baird and Paula Rosenblum called this research report "Tough Love" was because retailers seem to be reacting to perceived issues, such as the consumer being extremely price conscious, which isn't totally borne out at this point. And, while retailers cite needing a rules based pricing engine and other pricing solutions, they also spend a lot of time worrying about inventory, promotions-related issues, and solutions. Retailers seem to know they "need" and "want" tools and terchnology, but have to get their priorities straight on why they need them, how to use them, and what kind of results to expect. Meanwhile, more technology solutions are being created to help retailers deal with these issues.

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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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