The current state of global retail is teetering on a cliff. Between the U.S. – China trade war, progressively stumbling sales figures, and the looming threat of recession, retailers everywhere are finding themselves in a dangerously precarious position.
As such, it’s worth coming to terms with an increasingly apparent fact: technology-based data-driven pricing intelligence can no longer be sidelined. What was once viewed as an added bonus on has quickly blossomed into an industry-wide necessity. The only way to overcome economic uncertainty and compete with Amazon is by treating retail data analytics as a critical growth driver.
Walmart, for instance, has already taken note, surpassing Google and Facebook in its acquisition of tech-savvy talent. Ignoring the potential of data collection and letting the shifting tides of the market swing their profits would simply be negligence; instead, they’ve taken control of the resources at their fingertips.
So what does this mean for retail budgeting, exactly? Generally speaking, businesses must design tech budgets that involve goals and innovation roadmaps spanning across essential business functions like merchandising, marketing, supply chain management, retail operations, data analytics, finance, research and development, and more.
More specifically, it requires an awareness of emerging trends:
Evolving sales channels are producing new-age challenges
Most prominently, retailers are having to juggle the demands of a fragmented collection of sales channels. The rise of digital avenues has certainly complicated the supply end of things, but with great potential benefits: Shopping has never been more convenient or widely accessible. The question, though, is how to take advantage of the abundance of sales funnels available.
Furthermore, this shift is tilting the market away from physical stores toward virtual ones. In turn, the real estate question surrounding physical stores must be answered. Are they still assets? And how does their purpose differ from that of online shops?
Another challenge to consider is the need for more flexible supply chain processes. Smarter and more agile stocking and shipping policies can simultaneously improve margins and user experience. As a small example, just consider how grocers have pivoted towards front-door deliveries thanks to the Amazon blueprint.
Consumer buying behavior is more complex and changing
Sales channels aren’t the only evolving elements at play – consumer shopping behavior is changing. Businesses have to account for a growing number of recession-trained and fixed-income shoppers with higher standards and stronger values. The only way for these brands to stay ahead of the pack is with the help of real-time price optimization systems that give you data-driven insights into buying patterns, price and inventory levels, and the competitive landscape.
After all, consumers have access to more unique vendors and potential deals than ever before! And there’s an interesting twist on the data phenomenon: Retailers must appeal to a consumer base that also has more industry information at its disposal.
That said, when it comes to pricing strategies that win, discounts and low prices aren’t everything. In fact, the leading businesses are preoccupying themselves with the nuances of price perception – how to provide the best value for a buyer’s buck. This encompasses everything from service and experience to assortments and environmental impact.
Finally, it’s worth mentioning the challenge of appealing to a wide range of customers – across various demographics but specifically across an ever-increasing income gap. How does one become a realistic source of goods for both ends of the spectrum?
These are but a few of the deep, multi-faceted questions retailers everywhere must face. Here’s the initial foundation of a successful answer:
Beyond survival, 3 key capabilities that enable profit growth
The goal is to mature beyond the industry norm and move past the lazy solutions found in gimmicks or quick-cash schemes to create something users genuinely value. Something worthy of their time and money.
Dynamic Pricing & Promotion Agility.
Legacy pricing systems are often outdated and limited in scope. And, unfortunately, an overreliance on them is often the root cause of stagnant growth rates. However, with intuitive, technology-fuelled pricing strategies, it’s easy to quickly evolve from dinosaur to dynamic. With the right price optimization solution, analyzing buying patterns and capitalizing on competitive inventory gaps is a surefire way to set up pricing offers that entice buyers. The result? A boost in margins and customer loyalty. Consider it a win-win.
Brand Protection & Counterfeit Control.
Unchecked resellers are undermining established brands by pedaling goods via the “Grey Market.” Retailers, in turn, can either succumb to the whims of these nefarious agents (i.e. dwindling margins, tainted reputations) or they can arm themselves with some brand protection. This is where enforcing Minimum Advertised Price (MAP) policies come into play. With the proper tools, monitoring the market landscape and tracking pricing violations to ensure compliance is a breeze.
Targeted Cross-Channel Merchandising.
The growing difficulty of successful consumer targeting was expounded on earlier. Part of the winning formula lies in having an intelligent assortment strategy that offers viewers an appropriately curated, easily digestible selection of goods. Based on collected data, make the process of buying as easy as possible.
The recession-ready answer: evolve now (or get left behind)
It’s a bit grim, but it’s the truth: If you’re a modern retailer looking for long-term growth, you must invest in technology that gives you data-driven insights into your product offering, particularly as it pertains to dynamic pricing, brand protection, and cross-channel merchandising. Having the capability to understand buying behavior, monitor marketplace inventory levels, and adapt pricing in real-time is the advantage that is necessary to win that extra profit margin.
Investment now will give your business the competitive edge and help drive revenue growth during the inevitable highs and lows of economic uncertainty.