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  • Consumer confidence – does it impact pricing of products?
    • 11/01/18
    • Home Appliances
    • Retail
    • Technology
    • Online Pricing Intelligence
    • United Kingdom
    • English

    Consumer confidence – does it impact pricing of products?

    With additional external factors like inflation and Brexit, will this impact consumer confidence further and what will retailers need to do to reduce the impact to them?7

  • Consumer confidence – does it impact pricing of products?
    • 11/01/18
    • Home Appliances
    • Retail
    • Technology
    • Online Pricing Intelligence
    • Belgium
    • English

    Consumer confidence – does it impact pricing of products?

    With additional external factors like inflation and Brexit, will this impact consumer confidence further and what will retailers need to do to reduce the impact to them?7

  • Consumer confidence – does it impact pricing of products?
    • 10/31/18
    • Retail
    • Online Pricing Intelligence
    • Global
    • English

    Consumer confidence – does it impact pricing of products?

    When consumers feel more confident about their own financial situation and about the economy they tend to be more optimistic and spend more. However, in recent times consumers are not feeling optimistic, as tracked by the GfK consumer confidence monthly report. With additional external factors like inflation and Brexit, will this impact consumer confidence further and what will retailers need to do to reduce the impact to them?

    Why does it matter?

    Consumer confidence is an indicator for businesses and economists to understand how consumers are feeling in current economic climates. It should give a good indication on what consumers feel and what their potential spending plans are, when it comes to making major purchases. This is important for retailers and manufactures to track, as this can affect profits and help with understanding a consumer’s outlook.

    The latest GfK consumer confidence index for October remains negative and decreasing from -9 to -10, which suggests consumes are ready to further scale back their spending. The GfK consumer confidence study (see table below) found that 65% of consumers that were asked, believe that prices either will have a rapid increase or will increase at the current rate in the next 12 months. This could mean that consumers decide to buy now rather than waiting for price increases, especially with the uncertainty surrounding Brexit.

     

    What affect does it have on pricing goods?

    With low consumer confidence and the majority of consumers think prices will rise, retailers and manufacturers need to act to entice consumers to continue spending. As both need to make sure they sustain or increase demand levels with their pricing and promotions, otherwise they could see profits fall.

    We are already seeing some action, with retailers’ pricing on 43-55 inch TV’s dropping by 18% in the past 12 months – and 10% over the last 3 months. This indicates that retailers know they need to compete for business to gain more consumers and increase sales.

    For both manufacturers and retailers, until recently there was an upward trend in the number of consumers who thought that now was a good time to make a major purchase. However, this has taken a slight decrease in the last month – as shown in the graph below. So enhanced promotions on items such as white goods or furniture may well entice more consumers to spend, rather than save in the upcoming sales events.

     

    What else can retailers and manufacturers do?

    This is a pivotal time for retailers, with the ONS reporting that wage growth is at its fastest for nearly 10 years, suggesting that consumers now have more disposable income to spend on major purchases. Inflation will play a major part on this with the recent announcement that it has fallen back to 2.2%. If inflation doesn’t increase it could mean consumers become more confident about purchases and feel the effects of wage growth even more.

    With wage growth on the rise and inflation not increasing as much as initially thought, what do retailers and manufacturers need to think about, going forwards, to make sure consumers choose to spend rather than save?

    Both groups will need find ways to stay competitive and relevant in an arena where consumers are now more concerned about getting value for money or having a memorable shopping experience. For example, John Lewis recently announced that they are looking to boost their in-store experience – aiming to buck the trend of more consumers moving to online shopping rather than in store. This is an ongoing battle, given that ONS reporting shows online sales have increased by 14.2% in August 2018, compared to the same time last year.

    If online sales keep growing this way, retailers will more than ever need to be able to react fast in areas such as changing their prices instantly to make sure they aren’t second best or being undercut by a rival. This could also lead more manufacturers to having their own website to sell directly to consumers, and as a way to connect with consumers directly rather than through a retailer.

    Final Thoughts

    Overall, consumer confidence is an important indicator for retailers and manufacturers for current and future plans.

    With consumer confidence not improving, prices will need to be more attractive to get consumers to spend. Manufactures may need to take a leaf from Apple’s book and offer a high-end product at a more affordable price to entice consumers – as seen with the iPhone SE and iPhone XR. How retailers plan to entice consumers will be important to events like Black Friday and the Christmas period coming up. It is crucial that their promotions and pricing are well positioned, compared to competitor promotions, to make these events a success.

    On the plus side, with wages on the rise and consumers feeling that prices will increase if they wait too long, this could lead to a new wave of spending – especially with Brexit looming. The uncertainty could mean that consumers choose to spend now, rather than waiting to see what happens.

  • What drives price movements of tech devices?
    • 08/21/18
    • Technology
    • Online Pricing Intelligence
    • United Kingdom
    • English

    What drives price movements of tech devices?

    It is a common assumption among consumers that the retail price of flagship tech devices and features will gradually drop over time. But how much is price affected?

  • What drives price movements of tech devices?
    • 08/20/18
    • Technology
    • Online Pricing Intelligence
    • Trends and Forecasting
    • Global
    • English

    What drives price movements of tech devices?

    It is a common assumption among consumers that the retail price of flagship tech devices and features will gradually drop over time. Moreover, it is often assumed that the release of new models accelerates the price decline for the, now obsolete, previous models.

    That means consumers often think it is better to wait a couple of months before buying the latest tech device. But how much is price affected? We looked at a huge range of online pricing over time, to answer this question.

    How far do the prices of tech devices and features really fall, over time?

    The worldwide TV market recently saw the introduction of exciting new display technologies, such as OLED and QLED. Looking at the average price of three 55 inch OLED/QLED TVs (Samsung, LG, Panasonic), we see that the average online price has fallen by 34% between October 2017 and July 2018.

    Other consumer electronics categories show similar trends, but to lesser extents. For example, the online retail price of a laptop featuring a Core i7 processor has fallen 8%, on average, since the beginning of the year. Similarly, the average price of a smart watch has fallen 6% year-on-year (YoY) to August 2018.

    Overall, there is a considerable degree of variation between different products, reflecting their peculiar product characteristics and strategies, but data suggests a general downward trend over time for ageing technology features.

    Do new model releases accelerate price declines for older models?

    Sim-free smartphones offer a great case study in this area. So, let’s look at the impact that the release of two flagship devices (Galaxy S9 and iPhone 8) had on the average online prices of previous models (Galaxy S8 and iPhone 7).

    The release of Samsung’s Galaxy S9 in March 2018 seems to have had a noticeable influence on the price of the Galaxy S8, which decreased 14% in the following 5 months. A similar, albeit weaker, dynamic applies to Apple. The iPhone 8 release in September 2017 induced a decline in the price of an iPhone 7 of 6% in the following 5 months.

    It is worth noting that the average online retail price of the Galaxy S8 and iPhone 7 does follows a long-term decline trend (the iPhone7 lost 7% and the Galaxy S8 lost 15% YoY, compared to July 2018 prices), but it seems clear that the release of new models certainly had an influence on price movements.

    However, this is only half of the story…

    The price variations we tracked during the considered period highlight a key contrast between the approaches of the two brands.

    Samsung’s device is subject to higher seasonal fluctuations, while Apple focuses on limited price variations in key periods (e.g. Black Friday). This shows that, although there is a long-term price trend in place, brand strategies and retail promotions can have a big influence on average prices and drive considerable discounts.

    This dynamic is even more apparent if we overlay the average online retail price and the lowest online retail price. We can see from the chart below how promotional prices can cut deep under average prices and anticipate the price decline trend by many months. For example, Galaxy S8’ lowest price touched £550 in November 2017, 6 months before the average price reached the same level.

    Conclusions

    The assumption is true, that there is a general trend of price decline over time key tech devices, which is influenced by the faster release of new and upgraded models. However, long-term price movements are also heavily influenced by brand strategies and retail promotions, which can drive deeper price cuts across a shorter amount of time.

    This has important implications for both consumers and marketers:

    For a consumer wanting to buy the latest technology or a newer model, looking out for key promotional periods is a better strategy than waiting for the price to drop over time.

    For Retailers and manufacturers bringing new technology and new ranges to market, the key lies in understanding consumers’ expectation that prices of older models will fall, and their consequent spending behaviour, based on that belief.

  • 3 key requirements for an optimal online pricing tool
    • 07/12/18
    • Technology
    • Online Pricing Intelligence
    • Global
    • English

    3 key requirements for an optimal online pricing tool

    The secret to choosing an online pricing tool that delivers real value

    We are inundated with tech solutions for our daily lives that are fast, easy to use and help to reduce time spent on the mundane. Having used pricing tools for over 10 years, it has always been an observation that pricing tools were a “one size fits all” solution to a very integral business issue.  So what should we really be focusing on when selecting a pricing tool?

    The fact is that not all online pricing tools are born equal – so how do you filter out the ‘also rans’ to find the front-runner that delivers the very best market analysis for you?

    Data quality

    Firstly, it’s easy to get distracted by a professional-looking user interface and fail to ask ourselves about the underlying data and analytics. Accurate data of the highest quality and comprehensiveness is essential… incomplete or poor data leads to poor analysis, which leads to poor business decisions.

    So ask yourself: when you peel away the theatrics, are you willing to trust your company’s future on the data and analytics being delivered? What are data sources? Are they comprehensive?

    Speed and frequency

    The next thing is speed. As multiple intra-day price moves become normal, the speed at which your solution can provide your data is essential.

    So look beyond the load speeds of your tool, and instead ask your supplier how frequently the data within your tool is refreshed each day. Is once or even twice a day really enough, when prices in the market are being changed multiple times a day?

    User interface

    After you’ve satisfied yourself the tool you’re considering fulfills these fundamental needs, it is time to consider the usability and functionality being offered.

    We all need tools that are easy to use and that deliver the information we need in the format we need it in. Gone are the days of software solutions that fail to reduce the time we spend on the mundane.

    So ask yourself: Can you customise your view of the data?  Can your tool inform you when key changes that affect your specific parameters have happened in the market?  Can you see beyond basic pricing and search on features, promotional activity or anything else that is pertinent to your business?

    If you can’t do these things, you may find you are not getting the value out of your tool that you hoped for – or find yourself wasting valuable time getting your data into the format you want and delaying the speed at which you can make your critical pricing decisions. Didn’t you pay for this tool to simplify things?

    Conclusion

    A high-performing, high quality online pricing tool will give you more time and better market analytics on which to make your business decisions. To find your best-fit tool, speak to your provider about the requirements I’ve outlined here – and any additional needs that you want your tool to fulfil – and challenge them to push the boundaries and deliver on these. As artificial intelligence (AI) and algorithms get used more and more to complete huge chunks of analytics, our online pricing tools will continue to develop and improve at a rapid rate. So make sure you tie-in with a provider who is also planning and developing for the future.

    To find out more, please contact Barry Meacher

  • 3 key requirements for an optimal online pricing tool
    • 07/09/18
    • Retail
    • Technology
    • Consumer Goods
    • Online Pricing Intelligence
    • United Kingdom
    • English

    3 key requirements for an optimal online pricing tool

    What should we really be focusing on when selecting a pricing tool? In this article we give you 3 simple requirements you should consider when choosing an online pricing tool that delivers real value!

  • How to win the world cup with price and promotions
    • 06/14/18
    • Retail
    • Technology
    • Online Pricing Intelligence
    • United Kingdom
    • English

    How to win the world cup with price and promotions

    With the tournament kicking off in Russia this month, May and June represent crucial months for sales in the UK TV market. To win the lion’s share of this opportunity, TV manufacturers and retailers are focusing hard on competitive pricing and product promotion to entice shoppers. What's the best pricing strategy? Where should you focus your promotional activity? Find out more in our blog!

    • 08/24/17
    • Online Pricing Intelligence
    • Promotion and Causal Retail
    • Global
    • English

    The first three steps to getting your online pricing decisions right

    With saving money the number one reason that consumers shop online, retailers need to ensure they maintain the right price position. This involves a careful balancing act if you are to stimulate sales without any loss of margin. But you can manage this successfully if you get six core activities right. We take a quick look at the first three of those activities here…

    One: Track the right things, not everything

    You don’t need to track all of your competitors’ pricing and promotions activities to meet your pricing objectives. It is far better to focus your resources on tracking those pricing and promotions activities that can have the greatest impact on the performance of your business.

    Two: Benchmark your pricing against the market

    Pricing activity may happen at a product level, but tracking the price position of your full product range across categories using a pricing index is important. For this will enable you to ensure your price position compares favorably to the rest of the market. By evaluating pricing at both a product and category level, you can identify any price shifts and their potential influence on your price position early.

    Three: Make sure you are basing your pricing decisions on data you can trust

    Ensuring the prices of your specified products are benchmarked against all relevant competitors is a real challenge. Particularly when product descriptions and attributes can vary significantly across retailers. The accuracy of this matching process is key to the success of any pricing strategy. With data you can trust, you can better direct pricing decisions and negotiate with your suppliers to drive immediate value for your business.

    Connected Consumers’ ability to check prices whenever and wherever they choose using different devices has made it difficult for retailers to effectively manage their online pricing. To remain competitive, you must identify those pricing and promotions activities of your competitors to track. You need to examine your price position in the context of the market. You must also ensure you are basing your pricing decisions on the right data. But pricing decisions don’t simply end there, there are several other factors to consider that can drive your bottom line which we will explore further in our white paper.

    The positive impact on your revenue and profit of making the right pricing decisions can far outweigh your investment in the processes and services that support these decisions. The winners in the new retail battleground will be those that utilize pricing intelligence to get their online price position right.

     

     

     

     

     

     

     

     

     

     

     

     

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    • 06/16/17
    • Retail
    • Consumer Goods
    • Online Pricing Intelligence
    • Global
    • English

    Fine-tune and optimize your cross-channel pricing for better brand positioning

    Today’s Connected Consumers are increasingly price sensitive. According to our FutureBuy 2016 study, 58% of shoppers compare prices in different stores and more than a third (39%) use price comparison and discount websites. Consequently, promotional activity is intensifying as retailers and manufacturers battle to attract consumers with better deals. It is therefore vital that your pricing strategy is perfectly pitched.

    Perfecting pricing

    Defining and optimizing your pricing requires ongoing investment to ensure you are a) attracting buyers and b) securing your profit margins and brand positioning. You therefore need to continually monitor pricing dynamics and promotions across all channels: in-store, online and in print (ads, circulars, all relevant retailers and publications).

    Reviewing pricing strategies doesn’t necessarily mean price drops. It might be that, within the context of the market, your products are undervalued. You could not only be missing out on valuable margin, but also negatively impacting your brand positioning in the eyes of your target customer. A small increase in your price could have a significant impact, so this analysis can be hugely rewarding. In a recent project, we helped our client recognize that the strength of its brand justified higher price points. As a result, it claimed back valuable margin from its competitors. However, pricing that is too high could cause deal-seeking consumers to look elsewhere, so it’s important to find the sweet spot that is just right for consumers.

    Managing price erosion

    Price erosion is a sometimes unavoidable part of the product lifecycle, but manufacturers and retailers that have the ability to track both their online and offline pricing are better equipped to slow down unwanted price drops and ultimately maximize their margins.  Spotting price erosion early, before the price becomes set at that level, allows brands to be able to react to the correct market activity so they can bring back the highest ROI from their promotions.

    A competitive advantage

    With an overview of pricing, you can answer questions such as what is my product’s daily market price (advertised/promoted)? Is my pricing policy being followed? Is my pricing right for my audience – not too high, or low? What’s the ideal price gap between my product and that of my competitors?

    Crucially, we can help you track your pricing right down to an SKU level across the entire length of the customer journey. You can also combine this intelligence with Point of Sales Tracking data to determine the real return on investment of your pricing strategy.

    With these tools and techniques, you can fine-tune your pricing across all channels to optimize your brand positioning, and maximize your sales and profit. It’s a key tactic in your strategy to conquer the connected shopper.

    James Rudd is a Business Developer at GfK. He can be reached at James.Rudd@gfk.com.

     

     

     

     

     

     

     

     

     

     

     

     

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    • 06/13/17
    • Retail
    • Online Pricing Intelligence
    • Promotion and Causal Retail
    • Global
    • English

    Managing price erosion in the omnichannel shopping environment

    While eroding prices of technical consumer goods may excite the increasingly savvy and deal seeking Connected Consumer, they can be a big problem for product manufacturers and their retailers.

    Lower prices mean lower margins, and in today’s evolving omnichannel environment, it’s important to understand which promotions with which retailers bring back the highest ROI, as well as the impact retail promotions have on sales and margin.

    For example, in the durable goods market, a 10% cut in price could mean a 25 – 30% loss in margin for the retailer.  This is a big challenge if manufacturers have hundreds or even thousands of units in stores and distribution centers.

    Often a price drop starts with a single retailer, which can be due to a consumer price promise, pricing policies, or pressure from their competitors.  It’s important for the manufacturer to be able to spot price erosion early and act quickly before the price becomes set at that level.

    Does offline pricing on promotions drive down online pricing?

    It is easy to assume that online retail activity is responsible for driving pricing down since online sales continue to draw consumers away from traditional brick and mortar stores, and there are countless examples everyday of where this is happening, but is this the full story?

    In the below example which shows price erosion after the launch of a new TV set, we see that indeed an online retailer initiates the first drop (green circle), however, this is not the complete picture. Looking at the development of online and offline retailers, a far bigger impact on price was a promotion flyer published by an offline retailer.

     

    To get a complete picture of the market and how to react, brands and retailers benefit from being able to see both offline and online pricing so that they react to the correct market activity.

    In many markets, particularly larger geographical territories, the influence of offline marketing and in-store pricing is significant.  In these markets, there are regionally focused retailers and managers within larger retailer groups that have more pricing autonomy.  This leads to local pricing decisions that can drive the price below the online retailers serving the whole market with one single price position.

    Identifying this typically short-term behavior can reduce price-following activity which increases margins for retailers and better supports the manufacturers’ price position.

    Slowing down price erosion

    Combining daily online and offline promotional pricing can provide insight into the impact of offline activity and online pricing.  By aligning these two data sets with market data you can get unique insight to support better price and promotion decisions.

    While the objectives of at-launch and in-market pricing can vary (to maximize profit, gain market share or maximize penetration, minimize cannibalization within the portfolio, etc.), retailers and/or manufacturers can manage price erosion even more confidently if, additionally to knowing which price the product was offered at, they also know what consumers are willing to pay for this product, and where the optimal price point is for it to meet its objective.

    Insights on consumers’ budget restrictions and price perceptions are crucial to securely determine and steer pricing along the product life cycle.  Virtual store experiments with consumers are an effective way to quickly and confidently determine the price-revenue-profit triangle at different price points within the competitive set, and give manufacturers more confidence in their price decisions, and ultimately optimize the ROI of each SKU.

    Ultimately, price erosion is part of the product lifecycle, but slowing down unwanted and unexpected price drops can have a big, positive impact on margins for both manufacturers and retailers.

    To find out more on how combined online and offline price and promotion can help your sales please contact Adrian.Hobbs@gfk.com.

     

     

     

     

     

     

     

     

     

     

     

     

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  • Online sales account for a record breaking 48% of total Black Friday sales
    • 12/02/16
    • Fashion and Lifestyle
    • Home Appliances
    • Media and Entertainment
    • Retail
    • Technology
    • Consumer Goods
    • FMCG
    • Home and Living
    • Online Pricing Intelligence
    • Point of Sales Tracking
    • Point of Sales Analytics
    • Shopper
    • Trends and Forecasting
    • United Kingdom
    • English

    Online sales account for a record breaking 48% of total Black Friday sales

    This year we’ve seen a further evolution of Black Friday. The event, which in reality is still only a few years old on these shores, has become the key trading period in the UK retail calendar.

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