Intelligence Node has the smart retailer’s guide to getting safely to the other side of 2017.
There has been an unprecedented amount of technology change affecting how we live and shop in the last five years.
From mobile to cloud, the net result is that we are all more connected than ever before, with consumers now firmly wedded to the wide selection and information they get online. Increasingly they want the same level of convenience in-store.
Likewise, we want the instant gratification of an in-store purchase when we shop online. The world expects to shop any way it likes, which is the prime driver behind omni-channel, the promise of consumers can connect via any channel effectively and seamlessly.
We also live in a context of wider change and turmoil. 2017 will also be a year marked by a great deal of economic and political uncertainty with unsettled markets and price fluctuations as America comes to terms with a new president and Europe a new post-Brexit decision order.
Against this backdrop of change, what can retail decision makers expect to see in terms of drivers for change?
Algorithms and AI start to slowly replace reactive technology/human intuition
A big move towards achieving a better-connected customer experience is coming through the adoption of Machine Learning (ML) technology. More retailers will look to implement ML to automate the purchasing process and make online shopping even more convenient for the customer. Machine learning technology will ‘learn’ and predict the customer’s most likely next action, pre-loading pages to speed up browsing, for example, or providing the best channel for them to complete the action effortlessly. As a result, plan for ML to help you play a part in influencing a customer’s buying decisions and paths.
Transparency, transparency, transparency
The other aspect of the connected customer experience that will come to the fore over the next few months is the importance of pricing. Omni-channel means one single view of price and inventory for the consumer, irrespective of channel or format. But competition tracking is also a must – remember the consumer is always comparing what you are offering to the consumer across the street, so your pricing strategy has to be both sharp eyed and one step ahead.
With most retailers and e-commerce sites having literally millions of SKUs in multiple channels with different competitive dynamics and promotional strategies in play, having the right real-time view of the pricing landscape is essential.
Your solution also really needs to be able to work with big data to enable businesses to get a full view of the pricing landscape. This includes monitoring new and returning customers to optimise for demand, trends, products and pricing, as well as regional differences that may come into play.
Dynamic, not rules-driven, cataloguing
Each time you take a flight, some of the passengers will pay top dollar for the seat and others will have profited from some cut-price online deal. Expect this trend to spread to all other areas of retail life. Retailers need to get used to wheeling and dealing at all and every opportunity to make sure they win the business of the savvy online shopper.
Again, competition tracking is an imperative in this world of price comparison shopping. Having the capacity to do that will depend on having the right technology, which is why the sector is increasingly looking at how to exploit business intelligence in order to be as nimble as it can around pricing, sourcing and tracking your competition. This is data you can use to make informed decisions on, not guesstimates or gut-feel strategising.
Even better, with the right back office system all that information can be connected up with information about the customer as an individual, allowing you to offer highly personalised, price-sensitive, well-curated promotions.
Basket to take over SKU-based thinking?
The days of the dramatic markdown for the online shopper between “this price right now” and the “real” price are over. Amazon is now taking steps to stop listing manufacturers’ suggested retail prices, and where Amazon goes the rest of the retail world follows.
Real-time, dynamic pricing based on changes in demand is the only solution that can satisfy online shoppers’ continuous quest for a bargain. At the same time, pricing response time is critical. The sort of real-time optimisation in question is basket pricing. The online retailer uses smart cart pricing that intelligently unlocks recommendations and discounts based on purchasing and browsing history. Take Jet.com, acquired last year by Walmart, which makes extensive use of smart algorithms to prompt and support a great site visit. The company’s model is built around deeper discounting when more is added to a basket, which keeps shipping costs down.
Jet’s software has been described as like a real-time trading platform, digging out ways of making purchasing more efficient, so if you order cat food and a cat bowl the platform will find out if you can buy a cat bed at almost no additional shipping cost, enticing you into making another purchase.
Main office-based global pricing is dead
The contribution of any pricing technology, plainly, has to be its ability to drive revenue, margins and profits with better insights into pricing levels and shopper behaviour in real-time at a granular level. Consider how the recent Brexit and the end of a central European pricing strategy has created a UK and mainland Europe pricing mismatch.
Dynamic pricing should have the ability to adjust to changes in the market and consumer trends quickly down to the local level, as well as focus on only products and competitors the retailer believes are relevant at the time. What’s more, you need multi-lingual capabilities to reflect local differences, as country boundaries disappear with the rise of e-retail.
Plus, the savvy retailer needs to have the that ML ready to improve the connected customer experience, working to bridge the gap between the online and the offline experience and making the journey to the purchase a smooth one.
To survive and thrive in the next few possibly choppy trading months, it’s clear pricing will increasingly make or make or break you. You need to think like an airline, and always be flexible to craft the deals a super price-conscious market will take and make sure you keep a close eye on what your competitor is up to, because your customer surely will!
The right tools to help to know how the markets are working and price and track competitors accordingly is critical. A combination of clear volume, pricing and revenue goals, with automated real-time price adjustments constantly working in the background, aided by ML and smart tactics like basket pricing, will help retailers get safely to the other side of 2017.
The author is the founder and CEO at Intelligence Node (www.intelligencenode.com), a leading retail analytics company that helps brands and retailers make smarter pricing decisions
AUTOR : Sanjeev Sularia
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