DAVIS, CA – In our increasingly discount-driven era, what can produce retailers do to gain an edge? I recently had a chance to ask Ken Ouimet (CEO & Founder) and Edris Bemanian (COO) of Engage3, a competitive intelligence and consumer engagement company providing data-driven business solutions for retailers and manufacturers. Engage3 recently participated in a webinar entitled “Surviving the Emerging Price War,” presenting tools and tactics that retailers can use to negotiate increased price competition.
“You’ve got Amazon and Walmart entering a price war and they’re picking off the center store,” Ken begins. “From a technology perspective, variable weight items have always been the unaddressed area in pricing. I used to have retailers ask me what we could do with fresh at my first company, Khimetrics. Many companies had backed away from pricing in fresh, but this time it’s unavoidable.”
“Fresh is, in many ways, becoming the most important part of the store for retailers.” Edris adds. “What’s driving trips, actually, is fresh and produce. Consumers still want to look, touch, and feel their produce before they buy it, and we’re finding that it’s increasingly important to find the right price position on these items. Because now, in addition to traditional commodity items like milk, bread, butter, eggs, customers are paying increasing attention to the pricing on their variable weight items.”
Because many prepackaged goods are essentially identical to their competitors’ offerings, Edris explains, stores have less opportunity to differentiate on these items, and companies that can offer the steepest discounts may invariably win out with price aware consumers. But unlike prepared food products, fresh fruits and veggies have a number of unique attributes that can differentiate stock from place to place and store to store.
“Consumers are paying increasing attention to those attributes because of what we’re calling price and product transparency,” says Edris. “Consumers now have the ability to go and look online to research products and compare products across retailers and shopping apps.”
Retailers who can glean the most information about their consumers, and leverage that information to inform pricing and assortment decisions, will be best able to earn their customers’ business without giving away unnecessary margin.
“Retailers need to align their products and their assortments with their customers’ needs and wants, from a local perspective,” Edris notes. “In certain markets like Los Angeles, for example, you might have more interest, a higher demand, and a higher willingness to pay more for meat that’s antibiotic free, whereas in other markets you might find that consumers just simply aren’t paying attention to, or do not particularly value, those attributes.”
By utilizing data, segmenting, and addressing the needs of consumers, and targeting specific attributes that local customers are looking for—fresh vs previously-frozen, non-GMO, or organic, for example—retailers can better tailor their assortment and their pricing to consumers’ needs and weather pricing pressures.
“There can be a certain value associated with non-GMO items and organic items, and that’s where we try to leverage a combination of market share data, cost data, and sales data to figure out what consumers value and how we can price based on value, while still being fair to the consumer,” Edris tells me.
As for suppliers, Edris tells me that they can help their retail partners along by sharing accurate “actionable guidance and intelligence” and offering services like suggested retail prices that increase transparency and benefit supplier, retailer, and consumer alike.
“It’s imperative for suppliers to become partners to their customers, to the retailers, and provide added value from a strategic perspective. If you’re a supplier and your customers can trust you to help them with their pricing strategies and their assortment strategies, then you’re creating both a greater dependency on you and an additional value that you both benefit from. Invest in technology that will enable you to provide an accurate read of the market and provide strategic guidance so you can earn and keep your seat at the table during this price war.”
“Retailers will need to use fresh products to drive traffic to their stores. It’s going to be important to be more aggressive on price and to differentiate with better quality product. Help retailers differentiate on offerings by looking at the attributes Edris mentioned and help them market what’s unique about the product. What’s the product story? Help tell it. The manufacturers who win the race will be the ones who help their retailers win the war,” Ken concludes.
For more on Engage3’s insights into price competition in the marketplace, check out its webinar, here.
