It’s an understatement that retailers are under pressure. Budgets are tight and missteps are costly, as witnessed by the slew of traditional retailers shuttering their doors. From heightened shopper expectations to ecommerce acceleration, and now even a threatened border tax, the challenges are coming from all angles.
In today’s extraordinarily tough retail climate, competitive intelligence is more important than ever. It is one of the most reliable methods for retailers to identify and address their most pressing challenges and available opportunities.
Challenging conventional wisdom
Omnichannel retail requires retailers to consider how goods are merchandised and purchased across any platform at any time. But how, and from where, to generate these insights is an increasingly powerful question. Conventional “80/20” wisdom would dictate that omnichannel retailers should focus their competitive intelligence efforts and budgets in-store, where typically 80% or more of their own sales occur.
Yet, it’s a retailer’s online presence that increasingly drives traffic either to or from their store, both physical and virtual. So ensuring you have the right products, priced right online for your target market is the critical path to long-term success. This inevitably shifts where competitive intelligence budgets need to be focused.
It’s important to note that offline and online competitive intelligence tracking is not an either/or decision for omnichannel retailers. Certain items, especially traffic drivers and possibly select Key Value Items (KVI’s), still require retailers to execute more time-consuming manual store checks. Online competitive intelligence can be used to augment these in-store competitive snapshots with a broader set of SKU’s, possibly across a wider number of competitors, on a more regular basis. These can even be done in real-time if desired.
Optimizing ROI on Your Competitive Intelligence Spend
An added benefit to this budget shift is the potential cost saving offered by online price checks. It is estimated that a physical store-based price check typically costs three cents per price if the competing retailer condones the activity, and thirty cents or more if the price check must be acquired more surreptitiously – essentially sending people out to stores to linger in front of shelves using a hidden camera or other recording device. By comparison, an online price check is a fraction of this cost because the data is readily available online and can be collected and analyzed automatically with a designated system. In effect, online competitive intelligence yields more comprehensive insights at a fraction of the cost of relying on physical store competitive data sets alone.
While store and online price checks are both part of an effective competitive strategy, the traditional ratio should be flipped to reflect today’s market and budget reality. It’s where the journey starts for shoppers, and it’s where the investments need to start for retailers.
Jenn Markey is Vice President of Marketing for 360pi