Magazine Article | October 20, 2008

Tech Strategy Key In Changing Times

Source: Innovative Retail Technologies

Consumers are changing their strategies; you should, too.

Integrated Solutions For Retailers, November 2008

An improvement in consumer confidence won't just happen; it's going to take a significant amount of work on the part of the retail industry to meet consumers on their terms. If you're 'waiting for the economy to get better' without making strategy changes to facilitate that improvement, you're simply biding the time between now and your store's demise. I'm confident that when we come out of this economic downturn, the shopping landscape will look much different than it did heading in. Key to survival for most retailers in this economy is the ability to become a fulfillment facilitator at a competitive price point, and I believe this will be the case for years to come. Fulfillment and price optimization are, in my opinion, the lead fronts in today's battle for retail market share.

The strategy changes you should be considering to become a fulfillment facilitator and to ensure your merchandise is offered at a competitive price point are both technology-centric. Fulfillment facilitation is about cross-channel inventory visibility and availability and efficient delivery of goods. Technology's role here is paramount, and the great news is that you can start — or enhance — your pursuit of fulfillment facilitation utopia in modular fashion. Perhaps the integration of your multiple channels' inventories is a starting point. Perhaps it's the addition of Web kiosks in stores, which can serve as the interface to your 'endless aisles.' Typically, a retailer's path to enabling the sale via any channels doesn't require a major rip-and-replace of any back end systems. Instead, it requires a step-by-step plan to implement systems in modular fashion.

Tech Drives Price-Point Intelligence
Business intelligence is the foundation of price-point decision making, and price-point decision making is extremely important in this economy. The well-publicized decision by Home Depot to slash prices by 5% to 50% on 1,200 items this fall was not made in a vacuum, nor was it made solely in response to losing market share to slicker (Lowes) or cheaper (Wal-Mart) competition. If Home Depot (or any retailer, for that matter) can stimulate growth by cutting prices, and then sustain that growth by focusing on price point and value over the long-term, those moves will serve that retailer well in an economy marked by consumers who are hyperconscious about value and price.

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 On The Web: SAS' Lori Schafer sheds light on the value of price optimization at

Home Depot was an early adopter of price optimization software, which, using historical sales, inventory, and competitive data, helps retailers plan pricing strategies and manage markdown cycles to maximize profit. You could have predicted that price optimization would become a priority there again as it battles Wal-Mart on the price-point front. But understand that as it makes these pricing and merchandising adjustments, Home Depot is relying heavily on analytics software that both guide its decisions and model their anticipated results.

As retailers struggle with the economic conditions of the day, some will hold the line and try to tough out the financial slide. Smarter ones will make calculated investments in cross-channel fulfillment and price optimization, and they'll improve sales and profits as a result.