Leading apparel retailers are embracing advanced analytics and blending intuition with science to price smarter. The competitive landscape in apparel is shifting rapidly as new price leaders capture market share. The battle for value has never been harder fought. The very definition of value is evolving quickly, pressured by Amazon's entry into apparel, fast-fashion retailers, flash sales, and the arrival of ultravalue players. Between 2012 and 2017, only the value sector of apparel retail, including off-price players, showed any growth as both the middle and premium tiers shrank.
According to MarketsandMarkets, the global retail analytics market will likely more than double in size during 2015-2020, totaling about $5.1 billion at the end of the forecast period. The adoption of analytics solutions is increasing as more enterprises worldwide are realizing significant returns from using BI and analytics platforms and services. Of late, many retailers seem to be jumping on the AI bandwagon to improve their marketing efforts. Sailthru, a marketing technology company, published a study that included a survey with more than 200 retail marketers. Over the course of 2017, these retailers plan to leverage AI to expand their mobile and social media marketing strategies aside from improving customer journeys.
With so many variables it is extremely complex and time-consuming to determine competitive prices that add to the bottom line and also benefit the final consumer. With low-profit margins per unit, assigning the optimal price to a CPG is a matter of competitive advantage. A combined research by Nielsen, McKinsey, and GBA has revealed that'Pricing winners who adopted best practices in devising a pricing strategy were able to increase unit prices by 1.2 percentage points more than the category average. At the same time, they gained share by growing sales by almost a full percentage point ahead of their peers.' While some best practices are technology interventions, others are about partnerships.
You can call yourself a guru of retail pricing if you can make the right pricing decisions for every one of your products, separately and combined, based on their demand elasticity at any given moment. Each of your pricing decisions has to help you reach all of your current business goals and ensure the best shopping experience at the same time. In other words: to find a balance between your profits and traffic. Let's take a step back to where everything begins – your business strategy. The company's strategy is supposed to be converted into its pricing strategy and subsequently into pricing tactics.
As the 2018 holiday shopping season approaches, the retail sector will once again take center stage. Brick-and-mortar retailers haven't had it easy in the past decade, as more and more consumers shift their shopping habits as a result of ecommerce. However, despite some predictions that brick and mortars are doomed to become mere memories of the days of old, many retailers continue to turn a profit in an ecommerce-dominated market. Many successful brick-and-mortar retailers aren't just brick and mortars; they aggressively pursue omnichannel strategies that blend ecommerce with traditional commerce in a way that puts customers' needs first. The IoT (Internet of Things) is playing a key role in keeping retailers up to speed with consumers' wants and needs.