FOCUS 23
Robert Browne Partner KPMG Strategy Group
M
any retailers are already sophisticated users of analytics to inform price and promotion decisions, taking cues from the travel and entertainment industries.
For at least a decade, the biggest retailers have analysed point-of-sale and loyalty card data to segment customers and design pricing and promotions. For e-tailers, data analytics is in their DNA and companies like Amazon, for example, squeeze every ounce of opportunity from their data. To illustrate, research conducted by Profi tero last year estimated Amazon sets on average 2.5 million prices a day. That’s 20 times what even the largest retailers set in a month.
Competitive standard
Over the next few years, I believe pricing analytics will become a competitive standard for all retailers, large and small and across all categories, and those that don’t develop this capability will remain in a cycle of discounts and promotions. Mobile technology is only increasing price transparency for consumers and so retailers without pricing analytics will fi nd it diffi cult to get out of lowest-price-wins competition.
At the moment, building a pricing capability is costly for small and mid-sized retailers and most continue to rely on a mix of competitive benchmarking and ‘gut-feel’ to make price and promotion decisions. In addition, I often hear from retailers and their suppliers that they have
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plenty of data but don’t know what to do with it. Or worse, they have invested in analytics but are not getting the outcomes they hoped for.
It may take another year or two, but pricing analytics will become a competitive standard, embedded in key decision-making processes. And for those who cannot afford to or choose not to build this capability, new cost-effective, outsourced services will emerge.
Personalisation
I believe the combination of pricing analytics and mobile technologies will facilitate increasing personalisation and customisation of prices and promotions. Some companies are already offering personalised products and prices.
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PRICING
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