What's All The Price And Promotion Commotion?

The wallet share struggle retailers face is exacerbated by a mushy economy, resulting in an extremely price-conscious consumer. This doesn't sit well with retailers that have bought into price management strategies such as geocoding, whereby different consumers pay different prices based on their geographic profiles. It's also a slippery slope for multichannel retailers, who must not only manage pricing and promotions decisions in relation to competitive pressure, but must also protect themselves from themselves in terms of cross-channel price and promotion strategy.

Alexi Sarnevitz, senior director of global retail strategy at SAS, loves the complexity presented by retailers that experiment with price and promotion strategies, but he cautions that too much experimentation can become costly. Strategic promotion execution, he says, starts with how retailers respond to consumer demand. "It's the retail mentality to organize a store by product category, but there's this movement toward building the store around the consumer demand," he says. "This is the beginning of strategic promotion, but you have to balance it with practicality. Even if you could whittle your customer base down to six ‘types,' you couldn't possibly offer six different stores within your store to cater to consumer demand," he says. But many retailers, especially in the grocery segment, have been able to create ‘store within a store' concepts by repositioning merchandise. Food Lion, for instance, is one of many grocers that have built a c-store concept within the grocery store by repositioning many convenience-oriented items that were around the outer wall of the store to the center, making it easier for consumers to get a meal to go, milk, or bread. Merchandising decisions such as this, however, are best made with hard data gained by analyzing consumer behavior.

Jason Jacobs, founder and CEO of cross-channel solutions provider CoreSense, has built a company around helping small and medium-sized retailers achieve channel integration early on. "With the advent of the Software as a Service [SaaS] model, the small retailer is empowered to execute cross-channel strategies using fully functional platforms that provide payback within the first year," Jacobs says, "and this delivery model ensures it can happen at an annual cost that's less than it pays to process credit cards."