Retail without competitive intelligence is like running a race with a blindfold. You can’t know precisely where to go or how fast to run unless you have an understanding of your place on the track and how your opponents are doing. Competitive intelligence data delivers the insight top retailers need to avoid running in circles and inches them closer to actually winning the retail race. In fact, this competitive focus allows you to go beyond understanding what is happening around you and takes it to the next level to set the stage for clearer strategies in the future.
However, unlike a race, your competitors aren’t prominently displaying their strategies right in front of your eyes, especially when it comes to online selling channels. So how can you tap into those strategies? By mining and analyzing data, of course. In this blog post, we will go over the top two types of competitive intelligence data you need to mine to set your retail business up for success.
Determine Assortment Gaps and Overlap
The products you carry can make or break your retail business. Assortment optimization takes it further than just determining where your assortment overlaps with competitors’. Instead, looking into the assortment gaps where neither you nor your competitors are serving the market is a great way to take ownership of lucrative parts of your market.
For example, brand name electronics accessories typically dominate the market, as consumers want to make sure they only buy things that are compatible and safe for their big ticket electronics, like computers and TVs. The higher price spectrum of the market was saturated, but the lower end was not. Amazon used competitive intelligence data to their advantage and introduced a line of low cost charging cables and other electronics accessories for a fraction of the price their brand name competitors were charging. They have been highly successful with this because they had the brand recognition and trust to attract an underserved market and gain a consistently high volume of sales on these items.
This is just one example of using assortment gaps to your advantage with the help of competitive intelligence data. Other examples include determining which categories, sub-categories, and brands (hello, exclusive partnerships with up and comers!) are being underserved in the market. Filling in these assortment gaps often proves to be a worthy investment and even when it doesn’t, calculated risks in retail are the key to sustainability.
Mine Pricing Data
Assortment and pricing go hand-in-hand. When you start with the right products, you’ll then need to mine competitive intelligence data to help determine the right price for those items over time. This includes understanding how competitors have priced those items historically, but it also extends to how often they run promotions on them.
When it comes to rethinking pricing on established items in your assortment, understanding how you stack up with competitors over time is crucial. If they are always slightly lower than you, you know that they have no problem undercutting you, so maybe find a new way to add value instead of entering into an unwanted price war. On the other hand, if you’re typically priced lower than competitors, yet your sales are lackluster, raising prices might be the best course of action. That way, you can measure the price elasticity, and if it is positive or neutral, you’ll be able to enjoy higher margins on those items.
Price and price perception are often closely related, but monitoring how consumers see you compared to the brand image you think you’re portraying is a factor you may have overlooked. Retailers can accomplish this by monitoring relative price position across key categories over time in order to ensure where you actually stand in the market is in line with the image your brand seeks to portray (such as luxury or value).
Competitive intelligence data, when it comes to pricing, can help you figure out the best way to price new products and revamp existing pricing strategies. One main way you can put this data to work is by using it to conduct a SWOT analysis, which stands for strengths, weaknesses, opportunities, and threats. Mining this data creates the awareness that sets you up for action.
Making Competitive Intelligence Data Actionable
Mining data is all fine and dandy, but incorporating it into ongoing retail strategy is the only way to make the most of it. In terms of pricing, this means conducting price tests to determine the best pricing for all the products in your assortment over time. Pricing optimization is never finished, so this competitive intelligence data needs to be mined and acted upon consistently.
Pricing and assortment data can work together especially well when it comes to promotional optimization. Learning the depth of discounts that worked best on specific products can pave the way forward in terms of better understanding customer behavior, lowering ad spend, and boosting revenue over time.
Competitive intelligence data has been important in retail since the first merchants set up shop countless centuries ago. Modern retailers are lucky because they no longer need to run around town (or the internet, for that matter) to find out what their competitors are doing anymore. Competitors in the digital age don’t sleep and with the help of outsourcing data collection and analysis, your pricing and assortment optimization don’t have to either.
Need better data to inform your decisions? Whether in-store or online, Wiser has you covered from pricing to assortment to promotions. Schedule a meeting today to learn how to turn retail data into action.