By now the retail tango is becoming more familiar and haunting: burgeoning technology; greater transparency; changing competitive arenas; increased competition; multiconnected consumers; among other things. Most important, it seems, is the consumer — i.e., giving the consumer what they want, when they want it, how they want it, and where they want it. To do this, retailers must not only learn new dance steps, but also dance faster than they've ever done before.
This retail tango is especially poignant with regard to products and pricing.
To be effective, retailers have to know:
- what's going on in the marketplace;
- how the market is trending;
- what one's competitors have in their product assortments;
- what the competition is charging at any given time on specific products;
- what you're charging at any given time on specific products; and
- what you should be pricing for profit, in view of, or in spite of, the information above.
In short, offering the right products at the right time at the right place at the right dynamic price is the magic dance for a retailer's very survival.
With the aid of analytics, a retailer can:
- know and plan his/her own product selection;
- analyze his/her product assortment and determine which products sell well — and when; and
- find out, with regard to competitors, what products you have in common, what you have that they don't have, and what they have that you don't have.
A wise retailer uses this information as a guide for to what to carry and when, and how to price it for the greatest profit.
The Long-Tail Tango
Research and real results are showing that attending to the long tail can increase profits dramatically. To make your long tail profitable, analytics help you focus on products that don't receive attention on a regular basis, but can be real profit generators. Also, when you look at your assortment, you may think about discontinuing products with low margins or low inventory turns, but don't be hasty. For example, sharp data analysis might show you that a particular low-selling product is the reason a customer shops with you.
Bottom Line for Your Bottom Line
Retailers must continue to find new markets and always have a keen awareness of what the competition is doing. Treat your existing customers well; reward loyalty, give them reason to continue to shop with you, and give prospective customers every reason to do business with you.
Retail intelligence solutions let you know what's going on in the market, what's trending and where you stand in relation to your competitors, enhancing your ability to price right in order to grow, compete, gain customers, sell more, and, ultimately, have the largest profit margin.
To do this, you have to price right. Product assortment and price intelligence solutions, leading to the resultant golden analytic information, are requisite tools for any retailer that wants to keep up with, let alone surpass the competition.
Most important is that you develop strategies around your analytic information while staying true to your own company's needs, goals and policies. (McKinsey & Company says likewise in Big Data What's Your Plan?)
Naomi Shapiro is the marketing communications manager for Upstream Commerce, a provider of cloud-based, automated competitive pricing and product analytics solutions.