Marrying art and science to improve lifecycle pricing

Marrying art and science to improve lifecycle pricing

By Channie Mize, Chris Goodin and Emily Reasor

How innovative retailers align analytics, processes, and organizations to boost profitability.

Retail prices look simpler than ever to consumers – and more complex than ever to retailers. Every day, tens of millions of shoppers around the world go online to get reliable price comparisons in seconds. This phenomenon will only get stronger.

To drive profitable growth, retailers from soft lines to consumer electronics are learning to harness enormous troves of data and anticipate and account for promotions, couponing, markdowns, “buzz”, and even weather to set the right out-the-door price every day for each product in each marketplace—and determine exactly what else they should offer to persuade some consumers to look beyond price.

To make progress, they must overcome substantial challenges. Setting the first price in a retail setting is like making the first move in a three-dimensional chess game in a hailstorm: it’s only the beginning, conditions are shifting by the hour, and each move changes competitors’ responses. Multiply that complexity by thousands of SKUs per store, hundreds of stores, multiple channels from digital and catalogs to bricks & mortar, disjointed promotional and markdown decisions, and shoppers whose preferences and behaviors vary by region and demographics, and the game becomes far too complex for even the most experienced human to master.