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.
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.
One 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 attack 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.
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.