Regional Grocery Chain Optimizes Promotion Pricing to Compete More Effectively

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Overview

A regional supermarket chain needed to defend its market share against big-box, low-cost retailers and other price-driven providers. The retailer responded by matching the lowest prices in their markets, knowing this was not a viable long-term approach due to the negative impact on margin. For a sustainable advantage, the company needed a more effective and efficient promotion solution to improve its competitive position without “giving away the store.”

The grocer turned to Antuit to improve its retail relevancy through a better understanding of its shoppers’ wants, needs and behaviors. Antuit worked collaboratively with the retailer to implement a solution that maintained margins and boosted its ability to compete. 

Antuit’s weekly ad circular optimization capability, was a key component of the solution. Using the retailer’s transaction and loyalty data, Antuit applied predictive analytics within the optimization framework to identify key purchasing behaviors, including visit frequency, basket sizes, price elasticity and promotion responsiveness.

“Antuit’s pricing and promotion solution provided rapid return on our investment, while helping us defend our market share and increase shopper loyalty.”

VP of Merchandising

Regional Grocery Chain

Mining data to determine price elasticity

Using advanced analytics and proprietary algorithms, Antuit mined all relevant shopper data to define price elasticities and demand curves to better understand shopping behavior, seasonality and pricing on known value items (KVIs). Antuit’s weekly ad circular optimization capability also delivered an intuitive visual interface that allowed users to easily connect insights to decisions and accelerate adoption.

Planners provided business rules and constraints, such as price min/max, promotion time frames and inventory thresholds. The solution’s decision engine then determined the optimal price points for the entire product portfolio based on store traffic, sales and margins.

 

 

Optimizing the weekly ad circular

The solution helped planners optimize the performance of their weekly circulars by analyzing hundreds of pricing decisions, and calculating the optimal product mix, price point and ad placement to maximize financial performance.

Using price elasticity and demand curves, Antuit delivered industry-leading forecast accuracy, with front page offers averaging 82% accuracy and inside pages averaging 92% accuracy. The solution also uncovered an average margin increase of 8%. In addition to margin improvement, the retailer was able to successfully defend its market position.

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