Category: Retailer

08 Apr 2019
Bill Bishop with Ken Ouimet on Product Attributes as Key to personalization in retail part 2

Bill Bishop with Ken Ouimet: Product Attributes are Key to Personalization in Retail (Part 2)

This is Part 2 of a video series. Part 1: Bill Bishop Talks to Ken Ouimet About Price Image and Personalization is here.

Ken Ouimet, CEO and Founder of Engage3, met with Bill Bishop, Chief Architect at Brick Meets Click, at the National Grocers Association (NGA) Show in San Diego. They discussed recent studies on the gut microbiome that will deliver the ultimate 1:1 consumer personalization, the importance of developing a master data management for product attributes, and how retailers should start planning for a future where consumers use product attributes instead of brands to make purchase decisions. 

Below is the transcript of their conversation.


Ken: So Bill, when you think about personalization, what does a retailer need – what infrastructure do they need to have in place to be able to do that?

Bill: Probably the key thing a retailer needs to have in place to do the personalization is a rich set of product attributes. Now back in the day, product attributes were limited to color and flavor and a few items like that, but today many products have literally hundreds of attributes. It could be an ingredient attribute, it could be a claim attribute, it could be a health attribute. So there are entire businesses being built today to assemble rich attribution that allows a consumer to be able to make a judgment about a product and decide whether it really fits their need or not.

Ken: Most retailers that we work with, we see that they’re struggling just to maintain the product description.You know you’re talking about hundreds, thousands of attributes. How do you see a retailer managing those?

Bill: Well, the management of the attributes is tricky, and you’re absolutely right. Retailers struggle keeping track of data at a fairly basic level in many cases. But what I think the answer is, is that there will be third-parties who actually will assemble that data and transport it to you in a fashion, as a retailer, where you can put it to good use.

Ken: Yeah, it’s fascinating. Another interesting research that they’re doing at Davis–do you know Bruce German over there?

Bill: I’ve met him, yes.

Ken: Yeah, he’s doing some fascinating work on the gut microbiome. And they’ve just figured out how to sequence the polysaccharides in the sugars, and where that’s going is that they’ll be able to recommend diets specific to certain bacteria cultures. I think that could really transform–to be able to give consumers the information on what foods to eat to affect their gut bacteria cultures.

Bill: To me, the microbiome is a perfect example of personalization right down to the one-to-one level, because the analysis that can be done today will say exactly what your condition in your gut is and mine, and the recommendations would be highly personalized to your need. A retailer who delivers that kind of recommendation, and we feel the effect–which we’re likely to do with the microbiome–I mean, that’s pretty sticky stuff.

Ken: And there’s a lot of innovation going on with the dried foods right now. And then, what’s important is that you’ve got nutrients, like how much nutrients are stored in there. So giving that consumer that kind of information, I imagine, would be really powerful too, to direct them. Do they want frozen or canned, where are their nutrients going to be best?

Bill: The amount of nutrition is really something more and more people are interested in. So how a particular product is processed, whether it be frozen, canned, or dried. I mean if the retailer and the producer can explain which has the best vitamin and mineral components to it, that’s going to be very important to a growing number of people. And I think retailers can merchandise that very effectively, and maybe draw people back to center store.

Bill: I’m concerned that with all the good things that having product attributes available can do, that companies aren’t moving faster. Why do you think that is?

Ken: It’s a hard problem. First of all we have a huge change in marketing from mass marketing to personalized marketing. Then we need to tie the attributes to something–it has to be meaningful. The way we look at it is using them to create a consideration set of what each consumer will consider when they’re buying a product. Retailers struggle with just managing their product descriptions, and now you drill that down to a hundred attributes for each product–that’s a lot of work to manage. You look at some vendors like Amazon, they push it out to their vendors to manage, but if you’ve got 10,000 vendors that’s a lot to bring on-board to manage those. The other thing we see is master data management for the attributes. Each category is different, and will have a different set of attributes. And we’ll see that each consumer is different in what attributes they value.

Bill: So with the work you’re doing at Engage3 with consideration sets, is that going to help people move forward faster and realizing the full value of these product attributes?

Ken: Yeah, absolutely. The consideration sets are really magical. They allow us to make sure we serve up relevant products, but also they can allow us to use trade funds more effectively.

Bill: How do you develop a consideration set?

Ken: We look at the attributes of the products that the consumer is buying, and that’s a behavioral modeling point. So we use machine learning to cluster those sets of attributes and know what they’re looking for. And then there’s another way we manage it, is through what objectives does the consumer have, and that’s more of a top-down [approach]. Behavior will look at the history of when they set their objectives or maybe they’ve gone to the doctor and they see they’re gluten-free, you don’t want to wait for the history of the product purchases. You can start recommending right away.

Bill: Gotcha, so you’re able to help your clients more quickly implement and get to the value of these attributes, even though it’s a great big complicated job.

Ken: We’re moving in that direction. Today, we’re helping retailers manage their attributes to compare products with their competitors, so the store brands is a real challenge, especially with retailers like Aldi coming in with 90% store brands. How do you compare? You can’t just scan the UPC and know the product. So that’s a really important problem we’re helping them with. So that’s a smaller set of attributes, but where we see this going is to a broader set of attributes.

Bill: Developing this kind of expertise and developing consideration sets I think is going to really set Engage3 apart. I don’t know anyone else that’s doing that kind of work. I’m really pleased to hear you’re doing it.

Ken: Yeah we’ve been very innovative on that front. And we’ve got two patents issued, 20 in the pipeline, because we see those as being key to how retail is going to function in the future.

Bill: One of the things that I believe having good product attributes helps people do is when they know the attributes of products and they see several items with the same attributes growing. It’s an indication of a fundamental factor that’s attractive to consumers in both those products and probably indicative of a broader appeal. Do you see a role that Engage3 can eventually play in helping people sort see where the puck is headed in terms of some of the changing preferences?

Ken: Yeah, we’ve been starting to look at the categories on an attribute-basis, and that’s really fascinating. And so you start to think about understanding trends by attributes across a store. Things like gluten-free or organic or non-GMO, you start to see where there’s trends, and where you’re not allocating enough. When you start comparing to your competitors on those products, you might see that you’re short in some area or too heavy in some other areas.

Bill: So there’s really a number of different reasons why understanding the trends with respect to attribute beyond product sale is competitively valuable for retailers?

Ken: Yeah, absolutely. So they’re starting to look at their assortments on an attribute-basis, I think that’s a really interesting area. The other thing where we see that going is to understand the price–break down the price by attribute so we know, that way we can compare products better. To competitors or even products within the category, what should that gap be in price?

Bill: It’s interesting that you would say something like you just have in terms of gaps and attributes. We try to eat low-sodium products at our household, and the gaps between comparable items and the amount of sodium per consumption is huge. And we’d happily pay a premium, and we certainly like to have our attention drawn to the low-sodium items because that’s what we want. Right now we have to work hard to figure that out on our own. Is there going to be a way in which eventually you think people present their or curate their assortment so that things like low-sodium pop up more quickly and easily for folks like us?

Ken: Yeah, I’m starting to see retailers put signage up identifying the gluten-free products or the low-sodium products, but as you said earlier there can a hundred or thousand attributes for a product. I think it’s perfect of an area for a digital environment or to have a digital assistant that’s just guiding you by what you want, but reading through those labels is a lot of work and it’s too much work for most consumers.

Bill: Private label. Do you think these trends support more focus on private label? Will private label be more attractive as a result the emphasis on attributes and things like that?

Ken: It absolutely is. There’s an article recently in the Harvard Business Review where they were talking about consumers buy bundles of attributes as opposed to a brand. If you look at online, we’re seeing consumers search more by attributes. And probably the more that attributes–that data’s available and clean, we’ll see more of a focus on attributes than brands.

Bill: Love the idea that consumers are buying bundles of attributes. Now if I was in the brand business I think I’d get a little self-conscious.

Ken: I suspect where that’s going is it’s going to be competing on attributes much more than price. So I think we’re going to see attributes come up to the level of price in being a lever to move the sale. And the key is going to be knowing what attributes resonate with what consumer.

Bill: To reinforce your point, I will pay a pretty good price for dark chocolate to take advantage of the flavonoid effect and improve blood circulation. I’m not asking for, you know, a discount on that, I want the benefit.

Ken: I think we’re going to see more and more of that behavior, and that’s the exciting part about personalization. And it allows a manufacturer to capture more value when the consumer values hit, and they have the flexibility to price low to get people to try the product.

Ken: Well Bill, it’s been great talking to you and I always enjoy, over the last 25 years, getting together with you and your passion for pricing and your curiosity, and you’re always learning.

Bill: Well right back at you, you’ve had some amazing accomplishments and you’re clearly on the edge some additional major steps forward. You’ve got to be proud of that and your current company.

Ken: Well thanks, Bill, I look forward to seeing you again soon.

Bill: It’ll be my pleasure to get together with you whenever we can.

== End of Video

This is Part 2 of a video series. Part 1: Bill Bishop Talks to Ken Ouimet About Price Image and Personalization is here. For more videos like this, subscribe to the Engage3 newsletter, Pricing Trends. Subscribe here.

21 Mar 2019

Top 5 Things to Look for in a Competitive Pricing Platform

Top 5 Things to Look for in a Competitive Pricing Platform

Managing the pricing data collected during competitive shops is no easy task. With private labels, rapidly changing online prices, and multiple sources of in-store audits, retail data has become increasingly difficult to translate into market visibility. A competitive pricing platform helps to automate the data collection, apply advanced analytics, and garner insights and value.

The right platform can free up time and resources to invest in other areas and substantially improve market visibility. Here are the top 5 features to look for in a pricing solution:

1. Correlating Online and In-store Pricing

Online vs In-store

In today’s world of e-commerce, more and more retailers are taking an omni-channel approach to selling. A technology-enabled competitive pricing platform needs to take advantage of advanced web crawling algorithms to acquire this competitive data and correlate it against the data captured by auditors in physical store checks. This enables a more efficient and cost-effective approach to acquiring competitive pricing data.

These web crawls can gather data from dozens of popular online stores to compile the most accurate pricing data. With the right platform, a retailer’s online and in-store pricing data are easy to access and work together to inform their omni-channel strategy.

2. Customized KVI Lists Based on Statistical Analysis

KVI analytics

Historically, cost and timeliness have made it difficult to acquire quality competitive data. Given the dynamic nature of the retail environment, static KVI lists are not responsive enough to the realities of where to focus competitive pricing efforts across various geographies and store-specific categories. The retailer needs a pricing platform that allows them to shift from static KVI lists to ones that are easily customized by banner or even by specific store. Rather than taking a blanket approach, the critical decisions of where, what and when to comp shop should be based on strategic statistical analysis.

By monitoring how often products change prices at a competitor, a retailer can adjust their price check frequency to areas that require more visibility. For example, if a retailer is doing weekly checks on a KVI and then find that their competitors’ prices only change every few months, they can adapt their competitive shop in response. The resources spent monitoring a slow-moving item like hot sauce at six competitors every week can be allocated to a more price-sensitive area like eggs or dairy products.

3. Product Attributes

Product Attributes

With the rise of private labels, competitive pricing platforms must be able to compare product attributes. In traditional competitive shop programs, as many as 40% of items go unaccounted for because there is no UPC match. To solve this problem, competitive pricing platforms must be able to utilize visual data capture technology and advanced character recognition to compare product attributes. This allows product linking to occur not just by UPC, but also by key attributes and statement of ingredient similarities, for example, gluten-free and organic. This creates a more accurate picture of a competitor’s private label pricing strategy and their total value proposition.

A recent article by Digiday shows that retailers are rapidly expanding their private label selections. Some retailers now offer dozens of different private labels, and manually matching these products takes considerable time and effort. Automation and product attributes allow retailers quickly get relevant pricing data on competing items.

4. Quality Assurance Workflow

Quality Assurance

A competitive pricing platform must also have a strong quality assurance workflow. With today’s mobile app-enabled technology, automated processes can greatly reduce manual errors and ensure that only quality data is being captured at shelf edge. Additionally, such apps can compare shelf data against historical records, flagging any SKU pricing that seems historically unreasonable.

Reducing the time between data collection and pricing decisions is critical to getting the full value of the competitive shop. When QA takes too long, the data that is collected becomes stale and often inaccurate. Reducing errors makes pricing data more useful, especially when a retailer is competing against e-commerce sites that can make price changes instantly.

5. Precise and Accurate Data

A competitive pricing platform must have the ability to collect precise and accurate pricing data. This allows retailers to target competitive shops, optimize frequency, and specify which items to focus on within regions or individual stores.

Rather than casting a wide net to see what useful data gets brought in, retailers must be able to get a global look at the actions of their competitors while also drilling down to store-specific opportunities. When they have both views, they can see clearly where they are winning and losing.


A competitive pricing platform makes it simple to manage data collected through web crawls and in-store audits. By having prices and advanced analytics connected in a central system, retailers have the ability to review their competitors’ strategies and adjust their own. To learn more about the science driving our analytics, you can request our White Paper here.

20 Mar 2019

Engage3 Q4 2018 Pricing Report: Lidl Led in Private Labels, but Aldi Displayed Consistent Strategy in 3 Segments

Engage3 publishes regular market pricing reports to help retailers and brands enhance their pricing performance through data science and analytics. Register to get more detailed information about this report, or to automatically receive updates on pricing reports in the future here.

Engage3 collected pricing data during the last quarter of 2018 (October 1, 2018 to December 31, 2018) from 46 grocers at 198 store locations. This report shows how a select group of 11 grocers fared in their private label, national brands, and fresh offerings. 

In this analysis, the lowest price across regular, promotional or loyalty pricing for each price point was used, and outliers were excluded. The grocers’ average pricing in each category were divided over the market average (and subtracted one). Numbers greater than zero indicate a banner with above-average pricing, while negative numbers indicate a grocer with pricing below the market average. Note: Walmart data was not a part of this data sample.

Key Findings

  • Engage3’s analysis showed that Lidl, Aldi and H-E-B led in private label, coming in at -32, -26%, and -13% respectively, below the market average in this category for the last quarter ended in 2018.
  • Kroger led in the national brand category, followed by H-E-B and Target, where the mostly-private-label grocers Lidl, Aldi, and Trader Joe’s were excluded in the analysis.
  • Mostly-private-label grocers Lidl, Aldi, and Trader Joe’s took the top 3 spots in the Fresh category.
  • Aldi and Lidl displayed consistent strategy across their assortment, coming in below the market average and occupying one of the top 3 slots in the private and fresh categories.
  • H-E-B stayed in the top 4 in all 3 lists of private, national, and fresh categories.


Lidl led in lower prices at -32% for its private labels, beating Aldi, H-E-B and Kroger, who came in at -26%, -13% and -8% lower prices, respectively. At the other end of the spectrum, Vons trailed everyone else with the highest price index of +13% for private labels, followed by Publix at +10%.

Kroger and H-E-B Shine in National Brands

Because Trader Joe’s, Lidl, and Aldi carry a very small number of national brands in their stores, they were excluded from the national brands analysis. Kroger led with national brand pricing of -20%, followed by H-E-B and Target. Sprouts came in at +5% for national brands, followed by The Fresh Market at +2%.

Aldi Led the Way in Fresh Pricing

Aldi took home the top spot in lower pricing for Fresh items at -29% for Q4 2018, followed by Trader Joe’s at -22% and Lidl at -21%. Vons ranked fifth at -14%.  Safeway and Publix charged the most in the last quarter of 2018, on average for the items in this study, with a +11% and +6% price index, respectively.

Register to get more detailed information about this report and full-resolution images, or to automatically receive updates on pricing reports in the future here.

19 Mar 2019
Bill Bishop Talks About Price Image, How to Compete with Discounters, and the Challenges of Personalization in Retail

Bill Bishop Talks to Ken Ouimet About Price Image and the Challenges of Personalization in Retail (Part 1)

Ken Ouimet, CEO and Founder of Engage3, sat down with Bill Bishop, Chief Architect at Brick Meets Click, at the National Grocers Association (NGA) Show in San Diego to discuss how retailers can compete with hard discounters like Aldi and Lidl. They exchanged views on the critical role of a store’s price image and offer insights about how personalized offers will replace mass market promotions. From custom e-mails to bots and electronic shelf tags, find out how Ken and Bill are envisioning personalization will look like in retail in the next 5-10 years.

Below is the transcript of their conversation.


Ken: A lot of retailers that I talk to, they’re really struggling with competing with Aldi and other hardline retailers. How can a high-low retailer compete on price image with these aggressive discounters?

Bill: Well, I think the first thing to recognize is that price image occurs in the mind of each individual shopper. So a retailer’s got to start thinking about how to change the impression of their prices a shopper at a time. The one way we’ve seen that work so far, and I’m sure there are others, is to take a look at what items are in the ad, identify the items in the ad that are purchased by a particular household, and to call attention to that. When you do that, you’re likely to have a set of prices that are quite a bit lower than what the discounter’s doing with their everyday low prices.

Ken: That’s smart, that’s a smart approach.

Bill: It’s one that’s proven to work and I know that it depends on having really good quality data to be able to know what prices are moving, which prices are important in a market, and to be able to make the assessment and build up to that kind of household by household change in attitude.

Ken: How do the retailers communicate those kinds of offers to the consumer?

Bill: The way that I’ve seen it work the best right now is knowing very few people get a paper today, and those that do, even fewer read it. So what they’ll do today is to take six to ten to twelve advertised items, put them in an email, and use those as the vehicle to communicate the items the consumer should be looking for when they go to the store and of course those prices are superior. So at the same time that they’re advertising item and price, they ought to be saying, “And check out these prices compared to any other place in town.”

Ken: I’m surprised, I didn’t know that email marketing would become that powerful over the newspaper.

Bill: Email marketing is an opt-in strategy that once a consumer trusts and becomes interested in the email, they’re actually running figuratively to the mailbox to open it and see what’s there this week. A lot of fun to watch.

Ken: Do you see the next step in that kind of strategy is to start moving away from mass-market offers and have personalized offers?

Bill: I think you’re going to see fewer and fewer mass market offers because frankly they’re expensive, they appeal under the best of circumstances to maybe 15% of the population or less–any individual mass market offer. And so there’ll probably be fewer of them and more and more will be done individually and as a consequence under the radar, which has some real advantages too.

Ken: Yeah that’d be huge in terms of managing your competitive position. What percentage of consumers with mass market offers, what percentage of consumers do you think change their behavior from the offer, and what percentage did you just give money away to?

Bill: That’s really the $64 question. When you offer a special price, are you changing people’s behavior or are you rewarding the customers? My own feeling is that both are very worthwhile because when you reward your best customers with a good price it’s a retention strategy that’s worth quite a bit to you as well. So I don’t worry nearly as much about it when we’re making those rewards because I think it brings the customers closer to you.

Ken: But what about when the customer doesn’t even see it, aren’t aware that they got a good price? I think of times when I’m in a hurry and I go to the store and I’m buying stuff, and the cashier tells me I just got 25% off something. I wasn’t even aware unless they told me.

Bill: Well, there’s a good opportunity for when the service side of the business comes in. And so if you’re in a hurry, you just pick up the items, and then when you check out the cashier says, “Thank you very much, sir. You saved $2.25 based on the special prices.” At least she’s reinforced the savings going on right there. You may not care even at that point, but the retailer’s taking a shot using the best resource they have to make the point on price reputation.

Ken: When I think of personalization, my belief is that in five to ten years, everything you buy is going to have a personalized offer. And I was just curious what you thought, where do you think personalization is going?

Bill: Personalization, I think, is going to be the big trend that affects grocery retailing over the next five or ten years. Our stores can’t support the mass market proposition, we’ve got out-of-stocks, and we’ve got not enough variety to satisfy customers. So personalized offers, targeted, but we know what people want to buy and we have that product both available and priced appropriately is the way the world is going to go. Now that’ll change the experience of a store, because you probably don’t have to go to the store to take advantage of that, but you’ll need other reasons to go to the store, and there will be other reasons–experience-based.

Ken: What challenges do you see for retailers over the next five years as they move into personalization? What are their biggest challenges?

Bill: Well, the biggest challenge is being able to find a good vehicle for personalization, for delivering that message. I mentioned e-commerce a little while ago, or email as a way to communicate, but one of the things–and I believe we’ve talked about this in the past–there’s probably some degree of discussion between the seller and the buyer as to what’s important and how important it is. I think bots will eventually be a basis for that kind of discussion leading to personalization, [and] they’re not there yet. So the introduction of bots to facilitate will be one thing. I also see that personalization will potentially be delivered right in the aisle on these new digital shelf strips. I mean, they’re going to be amazing, and if we can figure out who you are standing in front of the aisle, we can deliver a personalized price right to you in front of the cookie section or the soft drink section. So, we’re just on the edge and the nice thing about this show is it’s really exposed us to some incredible technology for delivering personalization.

Ken: Do you envision that different consumers will have different prices or it’ll be different discounts with the same shelf price?

Bill: Well, I think what we’re going to see is, today there’s a need to differentiate between the shelf price and the promoted price. And the reason is, the shelf price is on the shelf and the promoted price is when it’s on sale. When we get into a highly personalized world, the shelf isn’t going to be as relevant. So I think it’s going to be a combination of discounts or lower prices. I mean at the end of the day, the retailer wants to price–[to] change your behavior or hold your behavior without spending any more markdown dollars than they need to. And so whether that’s a discount or whether it’s a lower price, I’m not sure.

==End of Video

Part 2 of this video will be posted in the next issue of the Engage3 newsletter, Pricing Trends. Subscribe here.

22 Feb 2019

Digiday: Retailers Experimenting with Dynamic Pricing Due to Amazon

Digiday: Retailers Experimenting with Dynamic Pricing Due to Amazon

In response to a recent investigative report about Target offering prices on its mobile app that differed depending on whether the customers were inside or outside the retailer’s physical locations, Suman Bhattacharyya of Digiday digs deeper into how the industry’s biggest retailers are experimenting with pricing.

In the article, Ken Ouimet, CEO of Engage3, discussed the evolution of retail pricing and the challenges involved. Everyday Low Price retailers like Walmart and Target are under pressure by Amazon’s pricing algorithms, which can make price changes millions of times per day. As a result, some retailers have resorted to applying similar algorithms to their online and in-app pricing. Although these pricing algorithms work well on an online platform, brick-and-mortar stores are having more trouble implementing it.

“In the 1970s, most retailers had national pricing,“ said Ouimet. “Today, pricing is much more localized; dynamic pricing lets you segment with time, and it’s not only about dynamic pricing but personalized pricing – the price will be different for every buyer, and the discounts will be different.”

Market leaders like Walmart and Target “are competing with Amazon with eyes wide open; they realize it’s a different game – in 15 minutes, a price can be old and it’s usually based on competition,” Ouimet said. “You can’t fight that pricing is becoming more localized, more dynamic, and personalized – in five to 10 years, everything you buy will be based on personalized offers.

Engage3’s mission is to create a retail ecosystem where consumers, retailers and manufacturers all win. They use data science so Consumers are only offered products they want, when they want it, and at a compelling price; Retailers maximize profits by targeting only high-intent consumers; and Manufacturers only invest in discount coupons that have ROI.

Read Digiday’s article here.

15 Feb 2019
Comp Shop Optimization

7 Tips to Optimize Your Competitive Shop Program


Competitive shop programs, also known as competitive price checks, are a retailer’s main method of gaining visibility into their competitors’ pricing. An increase in hard-to-match private labels and the entry of digital e-commerce pricing have introduced higher rates of errors and reduced their effectiveness.

With the right best practices, competitive shop programs can change from being a source of frustration to a source of strategic advantage.

Here are some tips on how to help optimize your competitive shops:


Tip 1: Match your KVI list to your competitors’ products.

More often than not, the data that comes back from a competitive price shop has significant errors. You can’t make good decisions based on bad data, and scenarios like this only puts merchandising and pricing departments at odds with each other. In order to get the right pricing data, you need the right product list.

By matching your KVI list to your competitors’ products first, you save time and effort for both online and in-store data collection. When collection auditors are free to collect prices, they can spend less time looking for products that are unavailable at the competing store. This has two benefits: decreasing the labor costs of the shop and increasing the quality of data.

Tip 2: Do full-books sparingly.

Full books are expensive. The top 10% of products sold typically represent 50% of the total sales dollars. Therefore, full book programs that invest as much in competitive shopping slow-moving items as in fast-moving products are not cost-effective. The problem with full-book shops is that they assign the same value to slow-moving goods and fast-moving goods. As a result, goods that only need to be price-checked yearly are lumped in with goods that change prices weekly–at a premium cost.

Our studies have shown that price change cadence for a lot of items at most retailers are not as frequent as most would think. This knowledge can free up upwards of 50% of budgets to achieve more strategic competitive visibility like assortment changes. You can request a sample price change analysis for a typical retailer here.

Full-book shop costs

On average, we recommend that full-book competitive shops be done between two to four times a year. This can be supplemented by precisely targeted competitive shops.

Tip 3: Match your private labels.

When price-checking a retailer of similar size, it’s advantageous to match your private label products to theirs prior to the competitive shop. By matching private label products and finding equivalents, the collected data becomes much more accurate.

Egg Comparison

For example, if two stores offer private label free-range eggs but one carries a dozen-egg carton and the other an 18-egg carton, it takes more time for an auditor to make this connection and collect the data. By linking the products beforehand, the auditing process is streamlined, and more accurate data comes back to you.

Without product matching, visibility into your competitors is compromised. Private label products offer a greater picture of a retailer’s pricing strategies, and serve as important markers for category trends.


To unlock the last 4 tips, register here.


Combined with other pricing solutions, these tips can stack to make the most out of your competitive shop programs. To learn more about how Engage3 uses artificial intelligence and machine learning for retail solutions, you can register to receive our White Paper here. Frank Scorpiniti, CEO of Earth Fare, also sat down with Engage3 founder Ken Ouimet to discuss the latest industry trends and technology at GroceryShop 2018 — watch the video here.

14 Feb 2019
Falling Prices

Falling Prices Store in Sacramento: A Review

The latest store turning heads in Northern California isn’t known for its purchase-tracking cameras or smart shelf tags—-it’s drawing crowds to its particle board bins. Engage3 visited Falling Prices for a full report on what the discounter has to offer.

Falling Prices, a store based in the Sacramento-area city of Carmichael, serves as a liquidator of Target and Amazon goods. The store is attracting customers through word of mouth and local news coverage, touting a unique pricing model. Though the store is only open 5 days a week, prices fall—as the store name suggests— from $6 to 25 cents throughout the week.

If any goods are left in the store by the end of Saturday, when everything is priced at 25 cents, they are thrown away. Interested shoppers have to balance savings and selection throughout the week before the store is restocked.

First Impressions

When I arrived in the parking lot, the thing I immediately noticed was the sign hanging from the storefront. “Falling Prices” was printed on a white banner held up by four ropes. It was a Thursday, or a $2 day at the store, and there was still a variety of items to search through.

Falling Prices Parking Lot
A full parking lot, largely due to the new Falling Prices store

Outside, one of the windowed walls displayed the price schedule and a list of the product types that the store carried. While standing outside, I noticed a steady stream of customers going in and out of the store, despite it being an ,early afternoon on a weekday.

Falling Prices Sign
An explanation and disclaimer outside of the store, as well as a category list

When I stepped inside, what caught my eye was the furniture in the store. Every piece of furniture, from bins to shelves to the checkout counter, was made from particle board. The shoppers paid no mind to the decor, and instead were busy sifting through the various bins.

The particle board bins were filled to the brim with shelf-stable food products and toys, among other items.  I could see dozens of shoppers wading through the bins, uncovering hidden objects, and placing them in their carts. Here, a four-pack of chocolate almond milk; there, children’s Halloween costumes of every size.

On the far end of the store was a section dedicated to holiday decorations. Wrapping paper, string lights, and home goods made up the bulk of the items here. Immediately next to this area was a bin full of showerhead replacements. Signage was unnecessary, as everyone in the store knew it was $2 Day at Falling Prices.

I continued through the aisles, stopping to search through the bins and pick up odd items. In my cart I carried a collection of bobbleheads, canned sparkling water, a pair of headphones, and a showerhead attachment from an earlier bin.

Showerheads at Falling Prices
Dozens of showerheads, all priced at $2

Despite the appearance of the store, I could feel the excitement of the shoppers around me. The combination of discounted items and a treasure hunt vibe made the store enjoyable to explore.

After taking a few pictures and retracing my steps through the aisles, I was ready to check out. The wait was on the longer side, but this was mainly from the sheer amount of items that customers ahead of me had picked up in the store. Each cart had 20 or more items inside, and I was tempted to go back and pick out a few more items.

I walked away from the store with more than I expected, both in purchases and in opinion. According to a news interview, the owner of the liquidation store is looking to expand to a second location. Bargain hunters may find stores of a similar kind popping up in the area, but competitors will struggle to find a pricing strategy clever enough to outdo Falling Prices.

Local news stations featured Falling Prices during its second week of opening, attracting a larger crowd of shoppers and more items to liquidate. In the video below from the KCRA 3 Facebook page, you can see a larger variety of the products available.

Falling Prices in Carmichael

😱 BARGAIN ALERT: 😱A new store in Carmichael is selling retail items that could otherwise be expensive for $6 and below!Get the details >> https://bit.ly/2sxw7Mm

Posted by KCRA 3 on Wednesday, January 16, 2019

This article is part of the Engage3 Visits series, where we explore concept stores and innovative retail technology. To learn more about our earlier visit to Sam’s Club Now in Dallas, you can read the blog here. For more information on our visit to Amazon 4-Star, the retailer’s customer-curated offering, you can click here.

28 Jan 2019

26 Million Americans May Have Food Allergies: Retailers React

More adults are developing food allergies, and grocers are struggling to keep up with the needs of this food-sensitive group. In a study published by JAMA Network examining 40,443 individuals, researchers concluded that more than one in ten adults are food-allergic. Of those that were allergic, 45.3 percent were allergic to multiple foods, and nearly half reported developing their allergies as adults.

Health-focused grocery stores have long listed potential allergens on shelf labels, and the FDA requires that the “big eight” allergens be listed on packaging. However, as more adults develop allergies, these warnings may not be sufficient. Allergy-aware consumers are eager for clear labelling and warnings, whether they or a family member are the ones with the allergy. Their concerns are valid and urgent, as the number of people hospitalized from allergic reactions to food increased 350% in the last decade.

Show Trumps Tell

In a 2017 paper published in “Allergy, Asthma & Clinical Immunology,” scientists found that consumers preferred the use of symbols over words for allergen warnings. In the same study, people were asked if they were willing to pay extra for allergen information on all food packages. The results were overwhelming: 75% of respondents said they were willing to pay for this, on top of their monthly grocery bill (NCBI).

Shelf Labels with Gluten-Free warning
Gluten-Free shelf labels at a Texas retailer

“In terms of their willingness to pay, the majority of consistent respondents were willing to pay up to $10 extra per month for groceries for the inclusion of allergen labels on food,” reports the study. In other words, consumers are ready and willing to spend more for ease of shopping and peace of mind.

Beyond this, a significant number of survey-takers were willing to pay in the $10-50 range and even over $50. Consumers are willing to pay for the increased cost of food labelling, and may additionally improve their perception of allergy-conscious retailers.

Shelf Labels

Confusing allergen labelling presents an opportunity for retailers to fill the needs of their shoppers. Color-coded shelf labels and warnings make shopping simple for consumers with allergies and dietary restrictions. For this group of customers (which grows larger every year), clear allergen information contributes to their purchasing decisions.

Guide to in-store dietary labels
Shelf labels for dietary restrictions

Customers buying gluten-free products are even more discerning, as gluten doesn’t fall under the Food Allergen Protection Act in the United States. There is an added layer of difficulty when shopping, as food labelling for gluten is lacking compared to other allergens. The FDA only requires the identification of “ingredients that are — or contain any protein derived from — peanuts, tree nuts, shellfish, milk, eggs, wheat, fish or soybeans” (FDA).”

Retailers like PCC Natural Markets, based in Seattle, have taken the initiative ahead of the FDA by labelling gluten-free products with orange shelf tags. The color-coding system makes it easier for consumers with food sensitivities to navigate their aisles.

Current Methods

Whole Foods search filter
Whole Foods product search feature

Whole Foods recently increased their website functionally to account for allergies and dietary restrictions. Online shoppers can filter through products based on gluten-free, keto-friendly, and other attributes. The Amazon-owned grocer is one of the first major retailers to implement a product search system with dietary restrictions in mind, but other food-focused sites have had similar features for years.

In 2014, Pinterest users could start searching for recipes on the website based on their diet and  to exclude certain ingredients. The update made it easier for allergy-conscious home cooks to find recipes, but shopping for allergen-free products was still a cause for concern. Retailers have been comparatively slow to adopt the technology and filter through ingredient lists on a large scale, but health-forward stores like Whole Foods and Earth Fare are warming up to the idea. The Whole Foods website change will likely lead to future app development that allows consumers to search in-store.

What’s Next

Black and White sesame seeds
Black and white sesame, dangerous for those with the ninth most common food allergy

As allergy concerns continue to rise, consumers will be turning to retailers to help keep track of what is safe to eat and what is not. The increased number of sesame allergies is already affecting the market–the FDA is considering adding sesame, the ninth most common food allergy, to the list of necessary ingredient warnings. In the meantime, retailers have the ability to label these “fringe” allergies on shelves and websites. For the consumer with a sesame allergy, this means having a much safer shopping experience.

Frank Scorpiniti, CEO of Earth Fare, recently talked with Ken Ouimet of Engage3 on food allergies as well as many other topics. In addition to product searching, the two CEOs envision a store with full app integration to help consumers navigate aisles and avoid specific ingredients. To learn more about the future of app integration in retail, you can watch the video here.

26 Jan 2019

Nuro: Kroger’s Self-Driving Delivery Ace

Self-driving vehicles are set to transport more groceries than passengers, if Kroger continues its efforts. With the deployment of automated delivery cars in Scottsdale, Arizona, Kroger is taking steps to make grocery delivery easier than ever. The self-driving R1 vehicles, built by Nuro and working to bring Fry’s Food & Drug products to customers in the trial area, are indicative of a growing trend towards convenient grocery tech.

Fry's Groceries inside a Nuro R1
Fry’s and Nuro partnership

However, most consumers aren’t ready to take the leap of trusting self-driving cars, at least as passengers. In a recent survey by the Brookings Institution, only 21% of the thousands of respondents said they were willing to ride in a self-driving car. Much of the hesitation comes from moral concerns and how the vehicles should react in car crashes, but the technology is still appealing.

Self-Driving Versatility

Cooler-sized Amazon Scout
Amazon Scout robot

By bringing self-driving cars into the grocery space, tech companies can test and demonstrate the vehicles with minimal safety concerns. Consumers also have a chance to interact with this tech on a regular basis and grow to trust the delivery vans. Companies besides Kroger have started to integrate automated vehicles into their supply chain as well, most notably Amazon. The retailer recently deployed delivery via cooler-sized robots in a Seattle neighborhood. According to Amazon, though the carts require human supervision for the first stages of testing, they will eventually be able to deliver items on their own.

Still, the R1 cars in Scottsdale are the most advanced grocery delivery vehicles in use, and it’s easy to see why. Nuro, a company founded by former principal engineers at Google, has gathered an impressive team from tech giants and universities around the world. From the Nuro safety guide, we see a glimpse of the future to come: “Our custom vehicle is engineered to make delivery of everything more accessible — from groceries to pet food, prescription drugs to dry cleaning.” By partnering with a team on the cutting edge of self-driving technology, Kroger has set themselves up to be a leader not only in the grocery industry, but in automation as well.

The Nuro Ecosystem

The electric vans travel at a maximum speed of 25 mph and were originally accompanied by human drivers. The supervising employees traveled behind the Nuro R1s in their own vehicles as a way of monitoring the new technology. Since launch, the company has taken steps toward making the delivery fully autonomous.

What differentiates this kind of delivery from the competition is that the customers in Scottsdale can schedule the Nuro vans for same-day delivery, done through the Kroger app. Once a van arrives at a shopper’s home, they unlock a locker compartment on the vehicle with an in-app code. The speed and ease of delivery sets Kroger up to compete with heavy hitters like Amazon and Instacart, even if the range of the electric vehicles is limited.

The added consumer appeal of having groceries delivered via self-driving car is worth noting, as well. Nuro’s R1 fleet is fully electric, and the company frames their self-driving cars as an environmentally-friendly solution to errands. Their focus is on fewer emissions, safer deliveries, and less traffic congestion. It’s unclear how soon Kroger plans to expand their service with Nuro, but the technology is drawing interest from all over the retail industry.

Opportunities

Though consumers are slow to trust self-driving vehicles, Nuro’s R1 vans and similar delivery services may be able to win them over. The R1 is designed to be self-sacrificing and prioritize human safety on the road. Delivery vehicles are free from the ethical debates that have accompanied self-driving technology in the past.

Kroger has aggressively expanded their services in the past months, starting with their acquisition of U.K.-based Ocado. In November, the retailer announced plans to build an automated warehouse in Cincinnati. In combination with the Nuro’s vehicles, as well as a pilot to pick up Kroger groceries at Walgreens stores, the retailer is building an impressive infrastructure to compete with Amazon.

We recently attended GroceryShop and were able to see future developments in the retail industry. To learn more about retail tech innovations, watch this video of Tim Ouimet discussing the rise of agent-based shopping.

15 Jan 2019
Price Image

Using Price Image to Formulate Pricing Strategy

Price Image is how shoppers perceive a store’s pricing relative to its competitors. It is not the same as Price Index. Many more things go into establishing price image, including promotion programs, elasticities, seasonality, price ending numbers, and the overall design of a retailer store.

Price Index vs. Price Image

Price optimization solutions that are available today are based on rules and price indices that exclude your desired price image. What is needed are psychological models that measure your consumers’ perception of your pricing AND predict the impact of price changes on that image.

At its core, Price Image takes customer excitement into account. Whereas Price Index relies on historical data and plotting points, Price Image is predictive and non-linear – making it much more useful in making strategic pricing decisions. It incorporates psychological elements, making it a consumer-specific metric.

A Nobel Prize-Winning Approach

The calculation of Price Image was inspired at Engage3 by Markowitz’s Efficient Frontier Theory. It’s a theory  that has been successfully used for decades in managing financial portfolios and is now applied to retail pricing.It enables retailers to strategically manage competitive price adjustments so they can balance their profit goals with a desired price image in the market.

Efficient Frontier

What to Look For in a Strategic Pricing Solution

Price Image takes psychological factors and applies them to pricing data. The resulting models can be used to predict future profitability and are not reliant on historical data. Below is a list of what to look for in a strategic pricing solution:

  • Integration with clean, comprehensive, and accurate competitive intelligence data
  • Statistically-driven performance reporting that separates real pricing impact from market level “noise”
  • Streamlined workflow for competitive price recommendations and approvals
  • Alerts for incomplete or outdated competitive data for review
  • A visual price modeling tool to define the impact of strategic pricing alternatives
  • Competitor activity and movement callouts on highly elastic products
  • Makes price recommendations based on your objectives for:
    • Price image
    • Profitability
  • Allows Merchants and Pricing Teams define their strategy and show the financial tradeoffs for different alternatives

The predictive model is especially valuable in forecasting sales, because Price Image allows a retailer to see how its customers are responding to different pricing strategies. Greater visibility translates to higher profit margins and happier customers!

Learn more about how the Efficient Frontier Theory is applied to retail pricing in this video.