Visible changes in retail
The 340,000 retail companies in Germany ensure that we encounter commerce almost every day. What’s more, with our smartphones we have access to an almost infinite variety of commercial offers with us in our pockets.
However, a second look also shows that the retail sector in particular is undergoing enormous changes that not every business can withstand. High streets have vacancies, the list of retailers that have disappeared is long, and it is feared that it will become even longer.
What are the strategic challenges facing retailers today?
Danger of interchangeability – clear profiles are required
Consumers’ expectations of retailers have risen. Retailers no longer have a technical distribution role but must offer a real reason to shop there. Today, clear profiles and attractive product ranges are a must. A clear profile implicitly implies doing without things and thus has a direct influence on the assortments. For example, to this day there are no cigarettes or alcoholic beverages at German retailer dm because these categories contradict the retailer’s profile.
While food retailers tried unsuccessfully to counter the advance of discount stores by fighting prices (the price of coffee in particular was a bone of contention for a long time), full-range retailers have remembered their strengths and are staging the themes of freshness, regionality, selection that market shares have been won – despite higher prices. The diversity of the product range means that consumers today prefer specialists to generalists. The reasons for visiting a department store are not as clear as they were a few decades ago. This profile has not kept pace with consumer expectations.
Clear profiles also in B2B
Incidentally, these insights apply to the same extent to B2B trade:
What does your company stand for? Why should customers buy from you instead of the competition that is one click away? The answer should by no means be sought in the price.
Complexity of the assortments
Increasingly demanding customers have made product range expertise more important. The old retail wisdom that shelves are not made of rubber is simply not true on the Internet. There, much larger assortments can be presented – accordingly, customers also expect the right merchandise when shopping on site. Due to the spatial restrictions in stationary retail, the selection of the “right” assortment by category management is necessary. The large catalogs of online players require finding the right solution quickly, which means that the search should be intuitive, tolerant of spelling mistakes, and results-oriented. The same applies to filter options, these are to be set differently for each industry or category and should cover the top selection criteria. For example, for a B2B retailer in the heavy-duty shelving category, the payload would be the right criteria, but for lockers, the height or color would be the right criteria.
Extensive product ranges also pose challenges for pricing:
How do you price a B2B assortment of more than 100,000 articles correctly – and correctly at all times? Category roles can play a central role in simplifying the process.
Markets can hardly be delineated anymore. From the customer’s point of view, prices and offers from abroad are equally readily available and, with just a little more patience, the same applies to the goods in the case of orders. As a result, it is also necessary to reconsider who a retail company’s competitors are – it is often worth doing some research, because online marketplaces such as Amazon or Alibaba do not necessarily appear in the same statistics as the stationary or long-established digital competition.
Unfortunately, this is still not a matter of course: data-driven work should also be the norm in retail and not the exception. From purchasing to the POS (Point of Sales or POE – Point of Experience) or online store. Starting with the early identification of trends (with regard to listing decisions) to the identification of new suppliers to the selection of the right SKUs (Stock Keeping Units). Inventory management, planning, assortment creation and placement, pricing and action control, right through to the analysis of returns and complaints must also be taken into account. Our experience shows that there is often potential along the entire value chain in the retail business that retailers simply do not discover or analyze.
The solution approach of Roll & Pastuch
Prof. Roll & Pastuch – Management Consultants has extensive project experience and has successfully developed solutions for wholesalers and retailers in B2C as well as B2B:
- Pricing logic of extensive B2C assortments of a European market leader (Pet food)
- Pricing strategy of a leading B2B retailer with well over 100,000 SKUs
- Pricing strategy and data management for a regional market leader in food retailing (full-range retailer)
- Pricing analyses and dynamic pricing Retailer Non-Food
- Pricing Dashboard & KPIs B2B Multi-Channel Retailer
- Customer segmentation, pricing analyses and channel definition for a wholesaler in the paper industry.
Learn more about your pricing potential
We will be happy to answer your questions and provide you with further information.
Christoph Krauss is a senior director at Prof. Roll & Pastuch – Management Consultants. He has more than 20 years of experience in marketing and sales with leading consumer goods manufacturers and in advising clients on sales, strategy and pricing. Mr. Krauss has focused in particular on clients in the B2C sector.
Prof. Dr. Oliver Roll
Prof. Dr. Oliver Roll is Chair of “International marketing and price management” at Osnabrück University of Applied Sciences. He is a member of the European Pricing Platform’s Academic Advisory Board. Prof Roll gained extensive management experience at Simon-Kucher & Partners, before moving to Roland Berger Strategy Consultants to establish their Pricing Excellence Unit. He has managed marketing and pricing projects for numerous international companies. Prof. Roll also speaks at various management conferences on the topic of price management, and has published numerous articles concerning different aspects of the pricing process.