Category: Competitive Intelligence

10 Oct 2017

Engage3 Presents at Imperial Distributors’ Spring & Summer 2018 Seasonal Show

Imperial Distributors, a long time Engage3 customer & partner, is recognized throughout the Northeast, South Atlantic and Midwest states as a leader in both distribution and merchandising of supermarket non-foods. The Spring & Summer 2018 Seasonal show provided retailers with an opportunity to complement their food business with non-food offerings to drive sales & improve customer experience.

Ken Ouimet, Engage3 Founder & CEO, was a keynote speaker at Imperial Distributors’ seasonal show this year and discussed The Art & Science of Managing Your Price Image with attending merchandising & marketing executives.

Reach out to info@engage3.com to request information on the session and if you are interested in learning how to leverage competitive data and advanced analytics to compete more profitably.

Other presenters included Tom’s of Maine and Tebo Store Fixtures.
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Left to Right – (1) Ken, (2) Jack Wisniewski, Managing Director – Tebo and (3) Seamus Conlin, Food, Drug & Mass Agency Manager – Tom’s of Maine.
Left to Right – (1) Ken, (2) Jack Wisniewski, Managing Director – Tebo and (3) Seamus Conlin, Food, Drug & Mass Agency Manager – Tom’s of Maine.
28 Apr 2017

“Surviving the Emerging Price War” Insights

Industry-expert and Chief Architect of Brick Meets Click, Bill Bishop, hosted a highly-anticipated webinar session with Engage3 CEO Ken Ouimet and COO Edris Bemanian. “Surviving the Emerging Price War” provides in-depth insights, tangible examples and tips and tricks on how to compete effectively in the face of a brutal and imminent price war among retailer powerhouses. The webinar supplies all of the key ingredients in making up a retailer’s survival toolkit.

“When elephants start to dance, mice get trampled.” Ouimet began the webinar with an analogy that accurately reflects the current state of affairs in the retail industry prior to highlighting Amazon, Aldi, Lidl, and Walmart’s price commitments in the emerging price war. As these giants begin investing in their pricing, the “mice” that are forced to follow but fail to react strategically remain in the elephants’ path.

Ouimet continues with a five-step plan on how to survive in the face of a price war and be met with some form of success or resilience. His ideas center around the notion that “the best offense is a good defense.”

Understand your customer’s perspective.

Using competitive intelligence data shouldn’t be the only tool retailers leverage. Retailers must identify which items are most important to their local customers and understand what items they are comparing against at their competitors’ stores. It’s essential to utilize accurate product linking practices to compare products in the way that customers do with attributes.

By understanding the way customers value their products and perceive the changes retailers make to their pricing, retailers will unlock opportunities to move their customers up the loyalty ladder. Engage3 is collaborating with customers to bridge sales, market share, customer survey, and competitive intelligence data to identify the items that are most relevant to their customers in each market and refine retailers’ KVI lists to reflect this.

Gain visibility into your local competition.

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If retailers don’t have visibility into local competition, then they simply can’t compete. Convenience stores have a high level of what Engage3 calls “localization” (geo-specific pricing), and drug stores have a lower level of localization. However, as a time-series analysis shows, localization scores have been increasing, and retailers like Safeway, Kroger, and Publix are developing higher levels of localization. Kroger, especially, has been met with a high level of success with localized assortments.

If competitors are not very localized, it provides an opportunity to strike hard and fast without any visibility. Engage3’s platform, in particular, takes price change frequency and competitor assortment localization into account when improving competitive intelligence programs over time.

Fly under the radar and attack where they aren’t looking.

Slide2.JPGOne suggested tactic could be moving away from larger competitive zones and instead into micro-zones. A regional grocery retailer that scores very highly with consumers in regard to their price reputation was able to maintain their positive reputation by leveraging their smaller zones to take advantage of their competitors’ blind spots through a mix of lower prices to earn price reputation points while taking higher margin on other items by allocating across zones. Engage3’s Competitor Strategy Analytics reverse-engineers retailers’ pricing and assortment strategies to identify margin opportunities and competitors’ price zones.

Strike hard and fast.

It’s not enough for retailers to Slide1.JPGattack from hidden angles, but they must also have an element of speed behind them. Amazon has a high price change frequency on several items found in conventional grocery stores, and the juggernaut’s price change algorithms are highly responsive. Retailers are taking notice of Amazon’s practices and efficient strategies and are beginning to follow suit.

Retailers need to minimize the time it takes to respond to margin opportunities or price reputation risks by getting data that is as fresh as possible to maintain visibility. Engage3 has helped customers identify when retailers can confidently leverage online data to provide a faster signal to increase visibility and proactively identify opportunities.

Reinvest benefits to defend your turf.

The environment of a price war is pressing and inevitable, so the first step to surviving is determining how to invest optimally in your respective markets by efficiently monitoring the local competition. Once retailers can establish a robust process in a program, they should be able to reinvest those savings to identify additional margin or price opportunities.

Personalization

The segment concluded with a last, but certainly important, strategic lever in fighting a price war: personalization. Ouimet believes that the future is personal and that personalization is unique in the way that it’s a highly desirable tool for consumers that also helps create a tighter relationship within retail communities. It provides more loyalty and more convenience for the consumer, and when applied to pricing, it becomes the ultimate segmentation and the most powerful means to “fly under the radar.”

The five-step plan is heavily reliant on updating competitive shop programs and price optimization strategies. According to Ouimet, those retailers seeking to constantly improve will be well prepared if there is a price war.

To register to watch the full webinar and find out more invaluable insights, click here.

17 Apr 2017

Data Discoveries: Store Brand vs. National Brand Part I

Milk: it does a body good, but what does it do to your finances? Conventional wisdom has it that prices always rise, and milk is one of the most consistently expensive items in its aisle – everyone needs it for something, from breakfast to baking, so of course the price of milk is going to go up over time, right?

Well, kind of. In the first round of our Store Brand vs. National Brand Analyses, we examined promotional and regular pricing trends for Organic and Conventional milk, and while a few of these analyses turned up what we might expect – regular price trends for conventional milk are both positive, with nationally branded items showing a significantly steeper increase over the past year than store brands — we found several surprising results as well.

SB vs. NB Milk

Let’s start with the major one: compared to store brands, the average price of nationally branded organic milk is plummeting, dropping by nearly a quarter per gallon over the past year. Store brand pricing has held steady at around $6.00 per gallon; but where nationally branded items once averaged close to $6.15, that average has fallen to $5.87 in the span of 14 months, now beating store brands. Promotional prices on organic milks are also dropping steadily, though store brands are outpacing national brands there.

The choice seems clear in one regard: if you’re an organic milk drinker, don’t just default to the store brand. It’s a good bet a gallon of Horizon might be easier on your wallet.

15 Mar 2017
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Competitive Intelligence 101

The Sherlock Holmes of Retail

The phrase “competitive intelligence” is tossed around among competitive retailers and pricing strategists looking to grow revenue and expand their reach. Formally defined, competitive intelligence is the act of defining, gathering, analyzing and distributing intelligence about products, customers and competitors in order to make strategic decisions.

But what this really sounds like is a socially and legally acceptable form of spying. Companies that use competitive intelligence methods are putting on their black ski masks and waiting in stakeout vans with binoculars, ready to observe and analyze their competitors every movement.

This kind of “spying” is actually one of the oldest forms of ensuring market competition and drives the system of exchange that our livelihoods depend on. A basic study of economics tells us that markets are sustained by simple supply and demand models. When the demand for new Legend of Zelda video game increases, Nintendo is smart enough to increase their prices and the quantity that they supply to legions of insatiable gamers.

Profitable choices and strategic pricing is dependent on looking at external factors and the ecosystem of markets around you. Companies who want to thrive in a competitive environment know that they have to study two major areas: their customers and their competition. The two share a magnetic-like attraction, linking them together and linking the success of the company with their push and pull.

But to simplify things even more, let’s take a look at the classic lemonade stand example. Sally spends her summer vacations selling lemonade for 2 dollars a cup and expects about 15 sympathetic parents to visit her stand and buy a daily cup. When another lemonade stand opens up across the street, Sally notices her customers waning.

Infuriated, she grabs a recording device, her binoculars and heat-resistant trench coat and hovers around her competitor’s stand only to discover that the other lemonade stand sells lemonade for 75 cents a cup.

Now armed with this information, Sally can re-re-price her lemonade at 75 cents or less and make an informed and strategic move to stay the queen of lemonade sales.

Retailers like Sally want information about the prices that their competitors are charging, so they’ll be able to assess their own prices and make adjustments accordingly. By expanding the scope of our lemonade example to include the millions of industries and retailers with a diverse range of products and services, it’s safe to say that we’re getting a little closer to the heart of competitive intelligence as it exists in the real-world marketplace today.

The (C)ompetitive (I)ntelligence spy tool kit can be broken down into a strategic four-step method:

  1. Plan. Companies need to crack open their laptops and begin their Google stalking. In other words, retailers need to have a plan for what information they feel will benefit them. If retailers are asking the right questions, they’re asking about their competitor’s mission and history or their competitor’s target customers. They’re asking about which products are being priced at what cost and what special feature of that product attracts customers. They’re asking about promotions and advertisements.

 

  1. Collect Data. Retailers accumulate information by utilizing competitive intelligence programs or platforms. CI tools like MissionControl address the largest questions retailers might have about how to be successfully competitive with their pricing strategies and promotions. MissionControl is just one of the many innovative technologies out there that retailers are latching onto. There are hundreds of free and private programs that help companies analyze features of their competitors such as Quantcast, Knowledge360 or CIRADAR.

 

  1. Analyze the Data. Put your smartest and brightest to work extracting information that can be beneficial to understanding your own business in relation to the other markets. Alternatively, there are companies out there like Engage3 that collect the data and help set strategy with advanced analytics and insights. For Sally, it was figuring out that 75 cents would steal the neighborhood moms away from her stand.

 

  1. Make Changes. Implementing new pricing strategies, promotional programs or re-evaluating inventory are some of the many ways retailers then act on the data they’ve acquired. Sally quickly made the change and started pricing her lemonade at 50 cents. It worked like a charm.

 

Using competitive intelligence is like being the Sherlock Holmes of retail, and it is amongst one of the fastest growing business strategies of the 21st century. As long as there are Sally’s in the world competing against other lemonade stands, competitive intelligence will continue to play an important role in the social and economic foundations of the retail industry.

08 Feb 2017

Bob Ramsey on Online Retail, Amazon Competition and more

BobRamseyChief Operating Officer Bob Ramsey has had over thirty years of experience working in the retail industry. He currently manages pricing strategy and operations at Bailey’s, an internet retailer based in Woodland, CA that specializes in a unique assortment of professional outdoor work gear and equipment. Bailey’s pricing strategy isn’t to charge customers at the cheapest price, but rather to create a relationship between the consumer, product and price that eliminates price as being the decision-making factor for purchases. Bob says Bailey’s “will be profitable and will make money, regardless of the prices it charges.”

Bailey’s has a dynamic relationship with competitive intelligence, as the retailer’s niche marketplace doesn’t have as much access to competitive data as larger grocery retailers. Bailey’s collects most of their customer data through their shipping procedures and by accessing and watching their Amazon sales. The internet retailer thrives on being able to differentiate from Amazon by printing in-mail ads and having convenient shipping processes. Bailey’s will also be the first customer of Engage3’s new “personalized promotions” platform, and Bob hopes to work with Engage3 to expand customer relationships.

To learn more about Bailey’s online platform, Bob’s experiences in pricing strategy, and Bailey’s relationship with Engage3, check out Bob’s full interview.

20 Dec 2016

Six Reasons Why Retailers Need Dynamic Competitive Intelligence Solutions: Part II

Traditional Comp Shop Programs Don’t Account for Omni-Channel

Omni-Channel is no longer just a buzz word. Millennials now represent over 50% of retail spending. Both they and your traditional shoppers expect retailers to meet them wherever they like to go and however they prefer to interact. As a result, retailers are increasingly testing and rolling out click-and-collect and delivery programs. According to IBISWorld, online grocery sales are expected to increase 9.5% annually to become a $9.4 billion industry in 2017.

With all this in mind, retailers are beginning to realize that they can’t just look at the in-store data anymore—in fact now it’s much more cost-effective to use online data and augment with directed in-store checks. It becomes even more critical that retailers leverage solutions that help them understand where they can responsibly leverage online data (because sometimes the assortments don’t fully match) and where to use in-store data. Retailers’ online vs. in-store strategies are constantly changing, and so a hybrid approach becomes even more critical to maintain complete visibility.

Inflexible Programs

Woman-StretchingEngage3 market data demonstrates that while many categories and departments are still being priced at a national level, there is a strong trend towards increasingly localized pricing. It’s these location-specific products and categories that can be detrimental to a retailer seeking true visibility, because KVI lists and comp shop budget dollars are not allocated and reallocated appropriately. Far too often we see that many retailers’ competitive intelligence programs still leverage static, banner-level lists by which margin opportunities are missed and price reputation is threatened. It’s imperative that competitive intelligence programs be able to respond to market changes and leverage real-time analytics to maximize ROI.

Tactical, Rather Than Strategic Focus

Most retailers today put too much emphasis on the competition’s prices as they change, rather than the strategies that are being employed at the root of those changes. The comp shop processes of old produced data that was far too old and stale by the time it was received, and thus it has historically been much more difficult to discern the competition’s pricing and assortment strategies. Retailers need the ability to take a step back, see the bigger picture, and truly understand the competitive landscape and strategies that are being deployed around them.

Wrong Measurements

Confused Measuring Panda

We’ve seen that most pricing departments are responsible for managing a budget, however, oftentimes they aren’t responsible for measuring the quality or exact value that the program returns. How does your team measure the effectiveness or value of your competitive intelligence program today? We’ve seen over time the incredible value of appropriate Key Performance Indicators (KPI’s), or measurements, being defined and maintained to evaluate the program. KPI’s may include find rates, accuracy, competitive price visibility, completion rates, Return on Investment, and more.

05 Dec 2016
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Six Reasons Why Retailers Need Dynamic Competitive Intelligence Solutions: Part I

As the in-store and digital customer experiences rapidly converge, retail sales are being attacked from all directions. Powerhouses like Amazon, Walmart, and other online retailers have developed aggressive pricing algorithms with the power to change a price multiple times in a single day. Sophisticated players are even changing the prices on 10-20% of their online assortment daily (and prices on their top items as frequently as 3-4x per day). Other threats to retailers’ price image include the continued growth of hard-discounters and dollar stores and the proliferation of private label products.

Hi All, my name is Kevin Johnson and I work in Product Marketing for Engage3. I’ve spent the better part of four years in the competitive intelligence industry and I’ve spoken with hundreds of different retailers in the space about pain points and inefficiencies as they persist today in so many organizations. This article is meant to be a two-part culmination of what I’ve learned about the evolution of retail technology and comp shops. I’ll spend time reviewing some of the key challenges facing those operating in the “Old World” of competitive intelligence and why it is absolutely critical to have a dynamic solution to combat these challenges. Please don’t hesitate to reach out here if you think there’s something I may have missed – my “door” is always open.

Typical regional comp shop programs today leak up to 65 basis points* of margin largely due to inaccurate data and pronounced gaps in ability to respond to these dynamic price changes quickly. However, new technologies and data-driven processes are emerging to help traditional retailers adjust in this new world of price transparency, hyper-competitiveness, and shifting consumer behaviors. At Engage3, we see more often than not that retailers don’t always have the visibility they need to make informed pricing decisions such that both profit is maximized and price image is maintained. It’s become apparent that traditional, static approaches are not suitable anymore. The problems that we’re constantly seeing are as follows:

Poor Visibility, High Error Rates, and Low Find Rates

Due to the combination of slow competitive product and price check cycles, expensive and error-prone data collection processes, product linking complexities, departmental resource constraints, and the ever-shifting competitive landscape, it is increasingly difficult to achieve the right level of competitive visibility. The “Old World” of competitive intelligence does not allow for intelligent ways to match products across retail chains, which results in low find rates and leaves the door wide open for natural human error.

Retailers working within this “Old World” of competitive intelligence are exceedingly at the mercy of the labor collecting the data. When we begin working with a new client, we on average see error rates between 20%-40%, find rates between 50-80% and low overall visibility. Whether you use a price optimization system for execution or have a more manual approach to pricing, these challenges contribute significantly to the aforementioned 65 basis point leakage.

Comparing Apples to Oranges

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Retailers are flying blind in an age where private label products are becoming increasingly commonplace. According to Nielsen, private label products share of retail sales grew from 16.2% to 17.4% between 2009 and 2011, with year-over-year sales growth outpacing national brands by a significant margin. The trend highlights the importance of quality product linking methods as store brands continue to consume market share. Without accuracy in like-for-like products, retailers are getting little or no value for the money they spend on competitive intelligence. How can they, when their auditors are unknowingly collecting data for apples instead of oranges?

 

More to follow…