In the highly competitive world of retail, making informed decisions regarding product pricing is essential for a company’s success.
Given this reality, implementing a pricing solution proves to be a strategic choice to optimize business performance, increase profit margins, and remain competitive in the market.
However, the transition to a pricing solution should not be taken lightly. Choosing the right partner and implementing the solution have significant impacts at various levels of the organization. It provides relevant departments with powerful tools to enhance their efficiency, collaboration, and decision-making.
In this article, discover which services within retailers are affected by the integration of such a solution.
Category managers and buyers
Product teams are the primary users of a pricing solution.
Indeed, category managers oversee the business performance of their product category. They are responsible for competitive monitoring and proposing assortments. They are also the ones who take actions on pricing.
To optimize their category’s performance, they need to know the assortments and prices practiced by competitors. By using a pricing solution, they gain visibility and can provide a more detailed view of the category.
Category managers ensure coherence within their product family (range consistency, coherence of prices, etc.). A significant part of their work revolves around data. Traditionally, they operate using Excel.
The implementation of a pricing solution greatly simplifies their daily tasks. The time saved is considerable. The solution allows product teams to automate low-value tasks and focus on data analysis and strategic thinking. From an employer branding perspective, the use of a solution is also an argument to retain and keep the category managers loyal.
Moreover, adopting a dedicated solution also fosters collaborative work. Category managers can more easily share their strategies and dashboards.
On the other hand, buyers perform actions quite similar to those of category managers. Instead of focusing on product families, they concentrate their attention on the performance of products from specific suppliers. However, they use the pricing solution in the same way.
The effectiveness of our pricing solution, XPA Pricing Analytics, was highlighted by one of our clients. After implementing our solution, a team of 10 project managers saved approximately 360 days of work per year, equivalent to two full-time positions.
The IT department is directly impacted by the implementation of a pricing solution.
The impact is even stronger if the company is not accustomed to working with Software as a Service (SaaS) solution providers.
In the retail industry, many players store their data on internal servers. Transitioning to SaaS mode requires a mindset shift, which may raise concerns about control and security. However, these concerns are largely unfounded because SaaS vendors typically have much stricter security protocols than internal systems.
Similarly, some actors use Enterprise Resource Planning (ERP) systems to centralize their business operations. In such cases, adopting a “best of breed” approach with a dedicated pricing solution might not align with their usual practices.
For IT managers, the pricing solution implementation project raises essential questions, primarily at two levels:
- How long will the project take to complete?
- To what extent will the IT teams need to dedicate themselves to it?
- What about the security of the data?
Subsequently, the change management process takes place collaboratively between the IT team and a group of pilot users.
The pricing solution Optimix XPA integrates easily and quickly into the client’s IT architecture. To achieve this, we organize workshops with the client’s project team to clearly define the expectations for outgoing data, including fields and required formats. Once these expectations are established, the sole responsibility of the IT team is to set up incoming data streams.
Finance / Controlling Department
The implementation of a pricing solution within a retail company has a significant impact on the Finance and Controlling Department.
In the early stages, the financial manager is involved in selecting the solution. They take part in evaluating different competitors and assessing the expected ROI for each option.
In general, the Finance/Controlling Department is responsible for the financial management of the company, profitability, and margin optimization.
While most companies use marketing, communication, and logistics to increase profitability, pricing is sometimes an underutilized lever. However, the actions taken on pricing can have a considerable impact on retailer margins.
In this context, implementing a pricing solution becomes a competitive advantage. With the pricing solution, retailers can better assess the effectiveness of different pricing strategies and identify opportunities to increase their profits.
The Finance and Controlling Department uses the pricing solution to reconcile the prices practiced with the margins achieved. This allows them to analyze the financial impacts of the pricing choices made.
In certain sectors, such as the pharmaceutical industry, marketing plays a crucial role in the implementation of pricing solutions.
The marketing department is responsible for maintaining the brand’s pricing image. Their understanding of pricing is influenced by their knowledge of target customers and the competitive landscape. For instance, when selecting competitors, they can be very meticulous and may choose to exclude a particular brand if they know their target customers are not interested in it.
With this broader perspective, they can provide guidance and rules to teams like category managers and buyers, ensuring alignment with the brand’s pricing image and competitive positioning. They are also the ones who define the leeway that category managers can have in accordance with the brand’s pricing strategy.
Marketing sets the overall pricing strategy for the brand, providing a guiding principle. Depending on the organization, they may give teams more or less autonomy in setting prices.
From this standpoint, a pricing solution offers marketers personalized reports that help them:
- Understand market trends and competitor strategies : By analyzing historical data, it becomes easy to identify competitors who are followers or those who are actively initiating pricing actions.
- Identify products with significant potential for profit margins while still maintaining the brand’s pricing image.
Store managers, franchisees, and regional managers
For store managers, franchisees, as well as network management, the pricing solution is a tool that enhances communication and collaboration.
While the issue of pricing can be subject to different perceptions between the central office and the stores, the solution provides concrete and shared data to facilitate discussions on a common basis.
Locally, the solution helps in understanding the recommendations provided by the brand.
Conversely, the central office can better track the prices implemented locally, any deviations from the recommendations, and the impact of these decisions.
Furthermore, the solution refines price calculations, taking competition into account. Therefore, even though perceptions may differ, it actually strengthens the overall profit margin of the stores. Lastly, it streamlines the operational management of prices, freeing up time for local teams to focus on tasks more aligned with their core expertise.
The implementation of a pricing solution is a decision that impacts several departments within the company. It comes with significant gains in efficiency and profitability. It helps align various stakeholders around common pricing processes.
In this article, we addressed each impacted department separately. However, it is essential to understand that the choice and implementation of the solution are a collective project involving all these profiles.
The pricing solution breaks down the logic of silos and promotes interdepartmental collaboration. It is even possible to go further by integrating it with a complementary supply chain solution. The combined optimization of stocks, supplies, and prices offers immense profitability opportunities for those who choose to move in this direction.
Do you want to strengthen collaboration within your company and seize these growth opportunities?