The modern pricing strategies that are transforming retail

The modern pricing strategies that are transforming retail

Microsoft's Luke Shave and Flintfox's Steve Peppler explain the benefits of real-time pricing visibility

Caspar Herzberg |

This article first appeared in the Summer 2017 issue of The Record.

Retailers and consumer packaged goods (CPG) companies are selling across more channels than ever before to meet customers’ expectations and to remain competitive. As the sales process has become more complex, so too has managing pricing and promotional activities across disparate systems and devices.

Disconnected spreadsheets, apps and manual processes exacerbate the challenges of managing promotions and trade spend across multiple stores and channels. Many retailers and CPG brands don’t know how successful their prices and campaigns are until their end-of-month report. The lack of visibility hurts: a Nielsen study found that 20% of CPG revenue is spent on trade promotion, yet more than 50% of that results in a loss.

In addition to cutting promotion costs, retailers and CPG companies must adjust prices more quickly to keep up with the evolving global market. For example, online retail giant Amazon changes its prices more than 2.5 million times a day, maximising revenue and preserving margins.

Existing pricing and promotion tools weren’t designed for today’s fast-paced environment. Often, traditional multichannel software requires manual processes for updating and managing pricing so retailers can’t react swiftly to price changes. Companies must ensure their gross margin is higher than product costs for successful promotions, so reducing operational costs is key.

Retailers and CPG brands need a new approach to drive real-time pricing and offers so they can maximise sales opportunities. Often, a simple 1% increase in net price can increase operating profit by 10%, according to software provider Flintfox.

The Flintfox Pricing and Promotion Execution solution provides the real-time pricing visibility and control retailers and CPG companies need. It uses a Microsoft cloud-based pricing engine to calculate thousands of pricing requests per second, streamlining processes, improving pricing speed and calculation accuracy. Companies can easily maintain pricing rules and trade agreements, while maximising earnings and minimising the amount of money left on the table.

Flintfox’s solution integrates with existing systems and consolidates disparate sources of pricing, providing retailers with a single source of pricing truth for all their omnichannel trading needs. This approach provides unrestrained pricing flexibility on any product or customer attribute, enabling companies to satisfy evolving customer demand and match competitor pricing without compromising accuracy. The solution also provides real-time performance and transactional insights so teams can understand trade profitability. 

Together, these insights empower retailers and CPG companies to quickly take corrective actions to drive revenue growth. 

Luke Shave is global industry marketing lead for CPG and Retail in Microsoft’s Cloud and Enterprise Group and Steve Peppler is chief product officer at Flintfox


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