On the rare occasions that I actually take a golf lesson, the pros always talk about consistently hitting the ball with the “sweet spot” on the club face. “When you find that sweet spot, the ball will fly further, straighter, and higher while landing softer.” Then they show me a picture of some famous golfer’s five iron with a worn spot the size of a dime right on the “Sweet Spot.” I’ve searched for that Sweet Spot a long time and I’m growing more and more certain that it is just a marketing myth to sell more golf clubs. But just because I can’t break 90 doesn’t mean that you can’t improve your margins by finding the Sweet Spot for your product pricing.
For convenience retailers, pricing products in the Sweet Spot that maximizes margins while maintaining unit sales is anything but a myth – good store operators have done it for years. But recently keeping prices aligned has become a major headache because Covid, gas price gyrations and inflation are causing those elusive price Sweet Spots to jump around more frequently. To make matters worse, your suppliers are increasing their prices more often, and cutting into your margins every month.
If you tried to keep up with this on a manual spreadsheet, you could overwhelm your staff and still run out of time, leaving heaps of money on the table. You can’t just ignore these changes, because customers are pinched for cash and growing more price sensitive. If they notice significant differences between you and your competition, they may decide that your stores are charging too much, which could change their behavior for a long time to come.
The science behind finding the pricing Sweet Spot for each product is called Price Optimization. The good news is that a real-time front-office platform can automate all of the manual analysis, making very accurate pricing suggestions and even send them out as real-time alerts, whether you are trying to raise prices while maintaining sales volume or raise prices while maximizing gross profit.
Taiga is well positioned, with its real-time Front Office Platform, to provide a solution to retailers looking to perform rapid Price Optimization. Again, Taiga has collaborated with its clients to develop a scalable system that can measure price elasticity for every product at every store in real-time. With the addition of Price Optimization to your front-office platform, you will be able to price your products in the sweet spot a lot sooner than I will become a scratch golfer.
If you didn’t have a chance to read our article from last week about the difference between front-office and back-office systems, click here. I think it will give you a new perspective on your technology and help you prioritize your next investment as we head into 2023.