Price Benchmarking: Strategic Benefits for Retail
In today’s highly competitive retail market, retailers must constantly monitor their prices to ensure that they are offering the best value to their customers. This is especially true in the grocery segment, where prices can change frequently, and competition is fierce.
Price benchmarking is the process of comparing your prices to the prices of the competition in a specific market segment. This process helps retailers stay ahead in the market because it ensures your prices are in line with your rivals.
Benefits of Price Benchmarking
- Develop pricing strategy
- Increase market share
- Improve cost structure
- Realize trends
Benchmarking your prices helps you find areas where you can improve your pricing strategy.
For example, if a retail business realizes that their prices are higher than the prices of their competitors, they may choose to lower prices to effectively compete. Or, you may find your prices are lower than most of your peers and you may want to raise prices to increase your profit margins.
Market share doesn’t singularly correlate to price; it also encompasses value and experience. For example, a retailer that offers a buy online – pickup in store option might gain market share for customers seeking convenience.
But in terms of price benchmarking, let’s say you learn that your prices are lower than your competitors. That strategy could mean you attract more customers and gain market share. Sometimes lower price points are useful for retailers that are looking to expand their business and increase their revenue
Customers don’t have to rely on memory to compare prices across retailers. They can simply search for products online and comparison shop. If your business discovers that their prices are higher than its competitors, you might look straightforward ways to reduce costs (and in turn, lower prices). Retailers might reduce costs of raw materials, find way to improve production, or cut back on marketing expenses.
Price monitoring lets retailers stay informed about pricing trends and changes in consumer demand. With this information, retailers can make informed decisions about their pricing strategy and stay ahead of the competition.
Tips: Retail Price Monitoring
Retail businesses are able to effectively monitor prices through competitive intelligence. With competitive intelligence platforms, retailers automate price data.
- Reliable product matching: Price comparisons start by matching exact and similar products at scale.
(Bungee Tech’s product matching process provides your team with the data they need to make informed pricing decisions. Learn more here.)
- Location-level data: Competitive intelligence solutions should provide you with geographic data so that you can improve pricing based on the market.
- Beyond price: Retailers can leverage competitive intelligence to track other critical data points like promotions, assortment, and availability (or out of stocks).
- Automation: The best competitive intelligence solution automatically generates actionable analytics based on your data.
Your Competitive Advantage
Price benchmarking goes beyond price comparison, it’s also about analyzing product availability and gaining visibility into assortment gaps.
Competitive intelligence offers a unique advantage where you get access to digital, zip-code level data to account for all consumer preference drivers – from value and experience to availability and quality – and evaluate them against the competition.
It’s a competitive market. Shoppers are trying new channels and loyalty is low. Having the right prices is an important part of retail success. By the way, whether you adjust prices or not – knowing your place in the overall market is a true advantage.
By comparing (or benchmarking) your prices against other retailers, you can identify opportunities to improve strategy, adjust assortment, and increase market share. The more data you have about your business, the better decisions you can make.
Price Monitoring with Bungee Tech
You should be able to track competitor prices effortlessly. And, you can…
Pricing is a core capability for retailers. Retail businesses need support from a powerful data and analytics engine that has a proven way to gather and analyze data from your competition.