Grocery price increases are no longer a surprise to consumers—not in the wake of today’s dramatic inflation.
Despite this, food retailers have shown a hesitancy to pass along CPG price increases to shoppers, often due to lack of adequate information about what their retail competitors are doing.
CPGs need to take the lead in not only “taking price”—deciding when to raise prices to their retail partners—but also in demonstrating to retailers the data based on which they made their decision. This ensures each side maintains healthy businesses and that trading partner relations are as smooth as possible. However, it’s difficult to accomplish this without real-time facts about the state of the market and the actions of competitors. The best approach is effective management of price increases driven by shareable, real-time, hyper-local data.
A perfect storm of inflation drivers
Examining why CPGs and retailers are encountering so much price inflation is key. The reasons include supply chain hurdles and labor challenges some two years into the pandemic, and surging prices on key commodities—from lean hogs to corn to soybeans—have become topics of widespread focus.
CPGs and retailers relay different perspectives
Making the situation even more complex are differences in perspectives between CPGs and retailers. CPGs may recognize their margins will erode unless they raise prices. However, even if CPGs take price, retailers often show a hesitancy to pass this along to consumers. They are concerned that such a move will lead to a competitive disadvantage, whether or not they have the data to back this up.
Real-time data overcomes the hurdles. CPGs can leverage the data in moving forward on price increases, and Datasembly specializes in providing real-time, hyper-local and shareable data for this purpose.
Consider the example of a detergent manufacturer that needs to demonstrate to a retail partner the data being used to enact a price increase. It leverages and shares real-time data, which shows that a major retail competitor to the customer has increased detergent prices at a wide range of stores nationwide. The real-time data Illustrates the exact store level changes by the retailer, with the goal of encouraging the customer to act on price increases in key locations some 20 weeks earlier than it would have with other data sources.
Benefits of sharing data
There are many advantages for CPGs that share data with retailers, including the following:
- Faster and more enduring retailer implementation of price increases.
- Reduced chances that retailers will hold off on price hikes and instead seek additional CPG trade spend to compensate.
- Easier tracking and execution of price increases across stores.
- Improved ability to work with retailers on assortment changes by providing more of a window into the assortments of retail competitors.
- Improved visibility into how a retail customer is executing store-by-store new product launches to ensure these efforts progress according to plan.
Eyeing data intelligence in action
Retail pricing intelligence is most valuable when it analyzes activity across multiple competitive retailers.
Consider this additional example: A leading battery manufacturer raises its prices in response to rising commodity costs. Retailer A and Retailer B respond with their own price increases, and Retailer C does not. The manufacturer can’t require Retailer C to do the same, but it uses intelligence from Datasembly to demonstrate the price moves in the market. As a result, Retailer C discovers that all its competitors have already increased prices, and that not doing the same would be a missed economic opportunity. It implements a price change some 9 weeks earlier than it would have, and the price increase sticks. The manufacturer and retailer each achieve revenue boosts.
Datasembly’s unique take on product data
Datasembly is an expert in product data, providing hyper-local, real-time competitive intelligence about prices, promotions and assortments from brick-and-mortar and online stores. The platform gathers billions of product observations daily that are organized and provided via tools, dashboards, alert, and visualizations. Using Datasembly’s customized, proprietary pricing platform enables organizations to meet their unique needs. CPGs are provided with “same-as-in-store” retail pricing data, collected from public sources, such as websites and mobile apps.
Datasembly also leverages its product data to track and understand pricing trends in the grocery space and provides a free resource, its Grocery Price Index. The index measures weekly changes in pricing for grocery products using data collected from over 130,000 stores and over 180 retail banners that span over 30,000 zip codes across the United States.
Transparency results in smarter decisions
Having access to sharable real-time data makes CPGs into better and more effective trading partners. It enables transparency, fact-based and faster decision-making, earlier planning and improved retailer-CPG relationships. That’s the kind of outcome that drives business success and trust between partners.
This post is sponsored by Datasembly