Pricing Analytics in Retail

Challenge

Systematic pricing is one of the key success factors in the retail business. To generate sustainable pricing strategies, it is crucial to know and understand the impacts and influencing factors of successful pricing. Our client, an international retail corporation, faced the challenge of understanding the effects of price changes through systematic, data-driven pricing to develop new strategies based on this understanding.

Approach

Together with our client, we established and implemented the cornerstones of a data-driven analytics landscape during a twelve-month project phase. The first step was implementing systematic pricing reporting, which was then used to analyze pricing strategies across various KPIs. These analyses were conducted for different markets. It quickly became clear that simple reporting could only implement part of a comprehensive pricing analytics strategy. Consequently, statistical models were used to model the impact of price changes on sales volume, which were incorporated into price strategy development through simulations. Furthermore, the developed reporting tools were migrated into the client's IT infrastructure.

Result

Pricing analytics is an exciting area that generates real value for our client through data. By introducing pricing analytics, our client can now better understand the impacts of pricing strategies on the KPIs relevant to them. Based on the insights from the analyses, additional projects in the areas of price elasticity and dynamic pricing have been initiated, which we are currently testing and implementing together with the client.