Thanks to the pandemic, 2020 and 2021 were rough years for everyone, but there is no denying that they had their advantages for certain industries. With many other consumer activities limited, spending on CPG goods surged almost 20 percent. This allowed retailers to pause many competitive strategies as they focused on keeping up with the record-breaking demand.
But as things continue to normalize, grocery retailers will need to plan their next steps very carefully to maintain any advantage they gained. This is especially true when it comes to pricing strategy. Consumers didn’t just spend more during 2020, they made a dramatic shift to digital channels, and pricing competition is no longer limited to local areas and competitors with a presence across town.
That is why best-in-class retailers are proactively modernizing their pricing strategies by utilizing new sources of data as well as new processes and technology. Based on observing many of our customers in the industry, here are three of the top trends we see in competitive pricing today:
No. 1: Leading Retailers Are Evaluating More Competitors
In the past, many retailers would evaluate pricing data from other grocery chains and Walmart. But as more specialty stores enter the scene and online platforms expand, leading retailers are broadening their competitor pricing evaluations.
While every retailer takes a different approach depending on their store locations and customer segments, we have found that many of our leading customers are now regularly checking prices at:
- Whole Foods
- Amazon Fresh
- Amazon Prime
- Total Wines & More
- Dollar General
- Pure-play online retailers
- and other stores
The scope of these evaluations ranges from Full Book to Category and even KVI checks. Still, as a whole, they are intended to provide greater visibility into the competitors who are eating away at valuable basket-building dollars.
The cost of acquiring this data is justified by the ROI it brings. Not only does it equip retailers to compete more effectively by keeping prices in key categories within acceptable margin ranges, but it also allows them to take incremental margin dollars and basket value.
No. 2: Retailers Are Scrutinizing Key Items More Often and Reacting to Changes More Rapidly
In addition to expanding pricing checks, we have also noticed an increase in how quickly and frequently leading retailers respond to changes made by competitors. Some retailers track KVI and SSKI data from a host of competitors weekly and even react with pricing adjustments within 24 to 48 hours. Others are even more aggressive, mining complete Full Book scrapes on a weekly basis from hundreds of competitor locations.
No. 3: Price Zones Are Becoming Less and Less Reliable
In the past, pricing data aggregated in zones was accurate enough for decision-making purposes. But that is not necessarily true anymore as some retailers are now pushing pricing variations out on a store-by-store basis. Other retailers who wish to react to this strategy effectively must look at every store in these chains individually where they compete.
Additionally, with online shopping exploding with help from services like Amazon Fresh, Prime Pantry, Instacart, and Shipt, the pricing game has become far more complex. Tracking prices at local stores is not enough. Prices consumers see on the web for a given area need to be considered and adapted into your strategy, as well.
Unfortunately, developing the ability to process data from every store in a chain and online competitors is a huge hurdle for many retailers. Depending on the approach taken, the investment required can be significant. At the same time, information that is obtained digitally may not be entirely accurate. Some retailers are implementing blocking technology, which adds to the challenge of acquiring pricing data.
As the threat of COVID continues to recede, competition for consumer dollars will resume. Retailers looking to maintain their revenue growth will need to deploy a winning pricing strategy that takes into account local and online competitors.
That is why it is more critical than ever to have access to larger and larger sets of timely pricing insights and the processes to evaluate that information and respond rapidly.
Leading retailers are making great strides in this area, but many others are falling behind. That is why Wiser Solutions helps retailers of all sizes access the data and insights they need at the right time. You don’t have to face these challenges alone. Time is of the essence, so please reach out now as the opportunity is at hand.
Editor’s Note: This blog was originally published by RW3. RW3 was acquired by Wiser Solutions in early 2022 and this blog has been revised and repurposed for a global audience.