Retail Reflections and Recommendations for 2010
By Todd P. Michaud, Revionics President & CEO
Retailers are facing continued and more focused challenges in 2010, as consumers adapt to new ways of shopping, and competitors sharpen their tactics to gain market share. Revionics helps retailers in their fight on an individual level, and also has the opportunity to look at macro trends across our entire customer base. To help you maximize your retail profitability in 2010, here are the current retail best practices and trends.
First, price wars are impacting all retail verticals.
The consumer is bombarded with offers of new low prices, deep discounts in weekly fliers, value-priced private label, rebates, coupons, and more. Retailers need to fight hard, fight fast, and fight smart. Successful retailers have carefully evaluated their products, identified their highly sensitive items (key value items), and built aggressive competitive strategies around these items. Taking a blanket approach to the competition will kill your margins and give away precious dollars where your consumers may not be sensitive. Once you identify those key items, shop the competition for those items more frequently, so as your competition changes posture, you are lock-step.
Successful retailers have carefully evaluated their products...and built aggressive competitive strategies around these items.
Second, retailers continue slashing jobs and closing stores.
This is a sure sign that retail is not out of the woods yet. In the last two weeks, there have been dramatic workforce reductions from Wal-Mart, Walgreens, and other leading retailers. The consumer has more power than ever, and successful retailers respect the amount risk associated managing consumer perception of your brand and the products you carry. Consumer demand forecasting that can accurately help retailers predict in advance how consumers will react to shifts in price strategy is essential to mitigating risk and selecting the best plan. Revionics continues to invest in new and better ways to leverage our demand management software to help retailers merchandise their stores.
In closing, I encourage you to reflect on your goals and challenges for 2010, and invite you to partner with Revionics to help you be successful. The Revionics retailer is savvy, strategic, and armed with an arsenal of tools that can and should be leveraged for an exceptionally strong year.
RAPS Collaborate – A Better Way To Manage
Your Vendor Deals
By James A. Sills, Revionics CTO
"Another bad UPC from a vendor! Why are we still using pen and paper to manage vendor deals?" This is a real quote from a retailer I was working with last year on a promotion planning project. This retailer was depending on the vendor’s hand-written information. The UPCs entered on deal sheets were frequently in error. "There must be a better way!"
Yes, there is a better way and help is on the way.
Revionics is on schedule to release RAPS Collaborate in April of this year. This vendor collaboration portal is a common platform for retailers and their vendors to exchange information, plan deals, and execute reporting.
Vendors submit a deal through the retailer’s branded vendor portal — by either electronic data feed or via manual entry. RAPS Collaborate is integrated with the retailer’s master of item records, so all UPCs entered by vendor are validated against the item master. Exceptions are flagged to prevent errors at the point of entry.
And that’s just the beginning.
Vendor deals that are submitted can be reviewed by the retailer for approval, or rejection with comments. There is a full audit trail, so no more after-the-fact debates about miscommunications with the vendor.
It is easy to set up new vendors or update vendor information in the Vendor Management screens. This includes setting up vendor user accounts and security. Once the vendor logs in, they can view the retailer’s master promotion plan. It is very easy to submit a deal by specifying begin and end date, UPC, incentive information, order information, terms, and special instructions. The screen allows entry of the full range of incentive options, such as bill back, scan down, lump sum, off invoice, and layered deals. When the vendor submits the deal, an email alert is automatically generated and sent to the retailer.
The next time the retailer accesses the vendor portal, they also see the alert indicating there is a vendor deal to review. Clicking on the alert brings up the vendor’s deal information. The retailer can approve or reject the deal, which generates an email alert back to the vendor.
RAPS Collaborate is fully integrated with Revionics’ solution suite, including RAPS Promotion and RAPS Replenishment. Items on deal are clearly documented and can be easily added to a promotion event, such as a circular. The incentive is accounted for in recommendations of promotion items and offers — including long term price reductions (TPRs). Reports display the impact of the incentives on the category and RAPS Replenishment takes the incentives into account in recommending forward buys.
Vendor privileges can be managed so that access is limited to only their categories and stores. They can be given access to the forecast of their items, or in the case of trusted vendors, the store-level forecast for all the items in the category.
Both the retailer and the vendor can see total trade funds by week, quarter, year, and year-to-date.
There is a full audit trail, so no more after-the-fact debates about miscommunications with the vendor.
There are additional features for managing item master data. For example, the vendor can upload nutritional information and item attributes or even propose a new item for the item catalog, which the retailer can approve or reject.
In RAPS Collaborate, Revionics is offering a compelling vendor management solution that will improve the way retailers communicate with their vendors. Sharing information in a more timely, accurate fashion will introduce new efficiencies and create clear advantages for participants. For more information, please email firstname.lastname@example.org, or reach out to your account manager for a demonstration.
Ten Pricing Best Practices that Generate Solid Returns
Contributed by Revionics Merchandising Consultant Team
Frank Badillo, a Senior Economist for Retail Forward in his November 6, 2009 Washington Post article stated: "Don't expect shoppers to abandon their hard-earned lessons in frugality even if the economy starts picking up. Households remain focused on shopping for needs, and this kind of cautious shopping behavior will restrain sales improvements."
So as 2010 begins, what are the best pricing practices that still generate solid returns?
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Don't expect shoppers to abandon their hard-earned lessons in frugality even if the economy starts picking up.
Promotions for Profitable Growth
By Ramna Sharma, Revionics Product Manager
The economic recovery has not shown the strength that the retail industry would like to see. Consumer spending, in particular, continues to be conservative as the economy slowly crawls out of its hole. Price and promotions dominate consumer's buying decision across categories. Retailers are feeling unprecedented pressure to entice consumers via heavy promotional activity. But the rush to maintain low price points, without thorough planning and analysis, can have an adverse impact on profitability. It's critical for the retailer to know exactly what, how, and when to promote. Just as important, is how to communicate their promotional activities.
One of the key challenges for marketing and merchandising managers is inventory planning. Wild estimates or ineffective forecasting tools can easily lead to out-of-stock conditions or to over-stocking. And, unfortunately both are unpleasant. Out-of-stock situations can leave long lasting scars -- lost sales, frustrated customers, and significantly diminished brand reputations. While overstocking may seem like the simple solution, it brings its own headaches and overarching costs, defeating the whole purpose of a promotion. It is therefore extremely important for managers and marketers to understand the precise impact of a promotional activity on consumer demand.
There are various factors that determine promotion effectiveness. For example, the vehicle used to communicate the promotional message affects the number of consumers that learn about the promotion. The type of promotion and the brand being promoted affect the strength of the consumer response. Other key factors include stockpiling, cannibalization and halo effects, affinity, seasonality, and competitor promotions.
To run successful promotions that drive profitable growth, retailers must have a precise view of the consumer demand forecast. And, given all the influencing elements, this requires a powerful forecasting engine -- an engine that not only analyzes the planned promotion but also takes into consideration other parallel pricing activities, (like temporary price reductions and markdowns) to paint an accurate overall picture. Revionics takes pride in having the best-of-breed integrated forecasting engine, capable of accurately predicting demand at the item-store level. Sales promotions guided by a precise forecasting solution help retailers achieve their margin goals while keeping their customers delighted.
To run successful promotions that drive profitable growth, retailers must have a precise view of the consumer demand forecast.
Deciding what to promote also cannot be a random game. Offering a discount on an item that would sell even without the promotion is wasteful. Similarly, promoting an item that cannibalizes a high volume, high margin item also has a negative impact on profitability. Choosing the right set of products is extremely important for the success of the promotion. The forecasting intelligence of RAPS Promotion relieves managers of this herculean task by recommending items and offers that best meet the retailers' promotion objectives. RAPS Promotions saves valuable time and eliminates the unpleasant surprises of a promotion based on guesswork.
Promotions cost money - running a TV ad, printing a flyer, or setting up in-store displays - all cost retailers. Effective evaluation of a promotion, prior to execution, helps gauge the potential success of the campaign. A review of the anticipated ROI answers the question of whether or not a promotion is worth the effort and expense. RAPS Promotion demystifies this evaluation by allowing retailers to create multiple versions of an offer, optimize and forecast, and then compare their impact on the category side by side. Careful tuning of an offer aligns the promotion to the retailer’s immediate and long term revenue and profit goals.
Whether the aim of a promotion is to stimulate consumer demand or to build brand value, the planning and execution must be driven by thorough analysis, historic intelligence, and integrated forecasting – something that's core to RAPS Promotion. The ease of use and the rich feature set of RAPS Promotion sets it apart from the competition. It has been widely recognized as one of the leading promotion optimization solutions for profitable growth. The trust that the retail stalwarts have put in Revionics pushes us to continually innovate and improve.
Effective evaluation of a promotion, prior to execution, helps gauge the potential success of the campaign. A review of the anticipated ROI answers the question of whether or not a promotion is worth the effort and expense.
Pricing is Pivotal Role – Leverage our Personnel Template
Contribution from the Revionics Merchandising Consulting Team
The importance of having pricing experts with the right talent and right skills is more critical than ever. Often, retailers ask Revionics for a list of skills, accountabilities and measurements for the pricing positions. If you are thinking about adding or amending a pricing role, here are some key skills your should look for:
There are several key tasks that are imperative to the pricing professional’s day-to-day role. Some of the more important expectations are listed below.
Hiring the right people with the right mix of skills and then periodically evaluating performance is a vital component of any organization’s success. How do you assess whether a pricing expert is meeting goals of the company? There are several questions one can ask when evaluating the performance of your pricing resource:
Hopefully, this summary provides some valuable insight into the best practices for retail pricing experts. If you would like Revionics to review, post, or circulate a job posting for your organization, we are at your service!
Hiring the right people with the right mix of skills and then periodically evaluating performance is a vital component of any organization’s success.
Revionics University – Updated Course Schedule
Customer Training: Free online training is available for customers every Friday of the month. On-demand, personalized training is also available on-request. You can view the online course schedule for February and March at www.revionics.com/training.aspx.
Free online training is available for customers every Friday of the month.
Free educational sessions are available to all interested retailers.
Industry and Merchandising Education: Free educational sessions are available to all interested retailers. A new calendar of great guest speakers and relevant topics is currently being planned for 2010. Register at www.revionics.com/educate for the following courses:
Revionics Welcomes New Retailers
By: Monty Waltz, Senior Vice President, Sales
Despite the weak economy of 2009, Revionics experienced a very strong year as savvy retailers chose to invest in customer-centric applications such as price optimization. We are proud to welcome several new retailers to our customer community. Below, a few of them are highlighted.
Marsh Supermarkets, Indianapolis, IN: Known for their innovation, Marsh was the first grocery store in the world to use electric scanners when ringing up customer purchases. Marsh operates 98 Marsh Supermarkets and four O’Malia’s Food Markets, and is the largest pharmacy chain based in Indiana with over 40 pharmacy locations.
Holiday Station Stores, Minneapolis, MN: A leader in the convenience store industry, Holiday operates over 450 locations in 12 of the northern and mid-west regions of the US. They provide their customers with a distinct shopping experience, carrying a vast selection of quality food options.
Strack & Van Til, Highland, IN: Strack & Van Til, also known as Ultra Foods, operates over 30 full service grocery and fresh food stores throughout Indiana and Illinois. They guarantee the finest products at the best value in addition to providing customers with a friendly and safe environment.
Longos, Mississauga, ON: Longo’s operates 16 grocery stores with farm-fresh produce, handpicked each day at the Ontario Food Terminal. Additionally, Longo’s provides Meat, Dairy, and Frozen Food departments, as well as a quality bakery that includes cakes, pies, and other baked goods.
Business Partnerships Helping the Pricing Industry
By: Jeff Smith, Revionics EVP Business Development
Revionics continues to nurture partner relationships in the areas of technology, consulting and industry analysts. The goal of these relationships is to help retailers make a seamless transition to our demand management platform.
Staying current on industry trends is very important, as is having a good pulse on the needs of the retail industry. Revionics does this by maintaining a strong relationship with the research firms AMR Research, Gartner, Retail Systems Research, IDC, and Forrester. These relationships provide valuable insight into what the retail industry is looking for, the direction they are heading, and their needs. Regular briefings from these organizations are important to learn from the research they perform, and to validate future investments.
Great examples of technology partners that provide data to enhance the optimization process include Planalytics, Retail Data and Rival Watch. Planalytics provides business weather intelligence data, which is used to tune to improve demand forecasting, or to de-weatherize historical data. Competitive data continues to be a hot topic, with Retail Data and Rival Watch working closely with retailers and Revionics. Retail Data is the preeminent provider of brick and mortar competitive price shop information in the grocery industry, and Rival Watch is a leading provider of price shop data from online sources.
Microsoft is a strategic partner and core to the delivery of our Software-as-a-Service model. Nurturing a strong partnership with Microsoft ensures that the customer community benefits directly from Microsoft’s innovation.
More partnerships will unfold with more customers, more diverse industries, and extended geographies leverage Revionics’ Price and Inventory Optimization suite. Stay tuned to announcements of new partnerships in the coming weeks.
Revionics maintains a strong relationship with the research firms AMR Research, Gartner, Retail Systems Research, IDC, and Forrester.
More Talent to Help you Meet your Goals
By: Alisa Davis, Human Resources
Revionics is pleased to announce the addition of more highly talented and experienced team members to help you meet your goals. Many of these individuals may be working directly with you or behind the scenes in technology development.
OPERATIONS AND SERVICE TEAM:
Many of these individuals may be working directly with you or behind the scenes in technology development.
Industry Event Calendar
National Grocers Association: Supermarket Synergy Showcase
Retail Technology Conference
Food Marketing Institute, FMI Marketechnics