analytics

Price Transparency: An Opaque Matter?

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ALMOST OVERLOOKED during the Autumn business conference-slash-election season was a nicely-done bit of research about the new price transparency.

Prepared by RetailWire.com and underwritten by IBM Smarter Commerce, the study “Pricing Transparency: Can Retailers Regain Control?” was released October 5. It was conducted in an effort to better understand the phenomenon known as “show-rooming,” where shoppers use apps on their mobile phones to check merchandise prices while shopping in-store.

The study authors define “pricing transparency” as “The ability to learn the relative price positions of a particular item across competitive retailers.”  The trend had some folks pretty nervous around mid-year, especially retailers who specialize in high-consideration purchases, like consumer electronics.

The findings indicated that Price Transparency falls mid-level on the continuum of general retailer concerns – below the economy, competition and consumer behavior. Considered among pricing practices, however,  respondents did worry about consumer price sensitivity in general (ranked as #1 concern by 35%) and transparency in particular (ranked #1 by 21%).

Increased price sensitivity seems to be an enduring consequence of the recent protracted economic downturn. Many shoppers have re-evaluated their purchasing behaviors. Smart phone apps both enable and reinforce these behavioral changes.

Retailers have some effective defenses available beyond absolute lowest prices. Most are related to enabling shopper success in other dimensions. Superior, relevant assortment, exclusive items, and excellent item availability all can have a positive influence here, the findings suggest.

The best practice formula remains somewhat murky in the brave new world of transparent prices, but this research begins to make matters clearer. An Executive Summary of the “Pricing Transparency: Can Retailers Regain Control?” study, can be downloaded at: http://www.retailwire.com/page/10133/.

© Copyright 2012 James Tenser
(This article was commissioned by IBM, which is granted the right of republication. All other rights reserved.)

Wrestling With Markdowns?
This Webinar Can Help

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FOR SOFTLINES MERCHANTS, end-of-season markdowns are a necessary evil that clears the racks and frees cash, but too often margins are sacrificed in the process. A markdown analytics solution can bring vast improvements to these activities, resulting in markdowns that are fewer, better timed, and less deep.

Our friends at IBM DemandTec have teamed with Deloitte to offer a webinar geared especially for softlines retailers, which explores how integrating in-season (promotions) and end-of season (clearance) pricing decisions can reduce the amount of excess inventory that has to be heavily marked down at the end of each season.

Learn how these decisions can be optimized and implemented at the store and item level, ensuring greater shopper success and business performance. To register and attend this free webinar, click the banner below.

Markdowns in Softlines: Are you cutting your cloth too late?

Webinar Date: Nov. 7, 2012
Time: 8 am Pacific/11 am Eastern
Featured speaker: Chris Goodin, Principal Deloitte Consulting

© Copyright 2012 James Tenser
(This article was commissioned by IBM, which is granted the right of republication. All other rights reserved.)

It’s All About Conversion

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Download DOES YOUR MERCHANDISING WORK? Where do shoppers travel and pause within the store? How and when do they view and respond to items on display and in promotional locations? Do you have a mechanism in place to capture and act on this vital information?

Chances are, your e-retailing rivals are way ahead of you when it comes to sensing, capturing and analyzing shopper behaviors, product views and conversions. Like it or not, the informational and analytic norms of the online world are today redefining best practice for brick and mortar retailers.

That reality is evolving fast. With the advent of new video technology solutions that sense and analyze shopper behavior, merchants are gaining the ability to understand what shoppers are doing, in every store, every day. Practical in-store sensing is coming of age. Meaningful conversion analytics can be at your fingertips.

Download Familiar traffic-counting systems no longer meet analytic and operational needs of the brick and mortar retail industry. Retailers face competition from online stores and from each other, as convenience stores, big box stores, and even apparel stores and supermarkets diversify their merchandise to compete for a larger share of shopper wallets. In much the same way that e-tailers use online analytics to improve their conversion rates, brick and mortar retailers need empirical data to gain actionable in-store insights and make better merchandising decisions.

Commissioned by LightHausVCI and prepared by James Tenser, principal of VSN Strategies, The Conversion Advantage explores why actionable insights begin with capturing key metrics about shopper behavior: by store, by category, and by product. The white paper demonstrates how using Visual Customer Intelligence (VCI) systems delivers these key metrics by capturing data on customer movement, browsing behavior, engagement, and shopper demographics. It shows how these metrics help retailers increase conversion rates, optimize staffing levels, refine marketing plans, and create winning strategies. (Click either graphic to download.)

© Copyright 2012 James Tenser

Price Image in a Transparent World

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ONE OF THE SIDE EFFECTS of the “showrooming” panic which seems to grip some of America’s big box retailers has been a flood of learned and not-so-learned opinions from learned and not-so-learned analysts and observers.

Showrooming anxiety emerged during the 2011 holiday selling season, when chains like Target and Best Buy were revealed as victims. Shoppers were inspecting and comparing merchandise in their stores, then using mobile apps to find and order the desired items at lower prices from places like Amazon.com and Buy.com. The story had a second surge in media coverage during April, when Best Buy reported soft sales and the departure of its CEO Brian Dunn. There are too many articles to count about this. How important is it, really?

The Pew Internet & American Life Project reported Jan. 30 that about one fourth of shoppers had used a smart phone at least once to check a price in a store during the last holiday period. The release did not specify which types of products were checked most. I’d bet a month of sales that the skew was heavily toward high-consideration purchases like TVs and major appliances.

Nielsen recently released findings that suggest there is indeed a significant variation in impact of mobile device use across retail channels. Nearly three fourths of respondents said they used a smartphone to check prices on a consumer electronic item, while more than half said they had scanned a code with their phone in a CE store. This behavior was much less prevalent in most other product categories – but not zero.

The New Transparency
Clearly there is much more we need to understand about this shopper behavior complex — not only about how shoppers are altering their habits around certain purchases, but also regarding what brands and retailers should do about it.

To that end, DemandTec, an IBM Company, is now sponsoring a RetailWire survey with specific focus on how retail practitioners think brick ‘n mortar retailers should combat showrooming.This is a worthy undertaking with potential to help surface superior thinking about the new era of price transparency:

We’ll interpret findings from this study here later this summer.

Absent investigations like these, showrooming may remain a buzzword excuse used by unimaginative retailers to explain away their mediocre performance in the face of increasing price transparency. It’s already a hot-button headline word for the herd of analysts and reporters who interpret consumer behavior based on instinct rather then empirical analysis.

I’m concerned that retailers who focus too narrowly on defeating showrooming are at risk of actually defeating their own shoppers. I propose an alternative: Focus on helping them get the best deal possible — from your bricks or clicks.

It could be that showrooming is not all bad, if we pay systematic attention. It could be just the reality check you need on your price image that could enable early corrective action.

Retailers collect slotting, display, and promotional allowances from manufacturers in exchange for putting products on their shelves. In some sectors, the net profits from these activities exceed the net profits from sale of goods. A lost sale, while unfortunate, is not a fatal occurrence. And manufacturers may still have powerful incentives to pay allowances to physical retailers who put their products on display — even if some resulting purchases take place online.

© Copyright 2012 James Tenser
(This article was commissioned by IBM which is granted the right of republication. All other rights reserved.)