Zebra Confidential

EXECUTING REAL-­TIME PRICING FOR THE ALWAYS-­ON CONSUMERS

TODD BERNERVICE PRESIDENT, ZEBRACOMMERCE

JOE MCCORKLEGLOBALRETAIL SOLUTIONS DIRECTOR, REVIONICS

Zebra Confidential

STATE OF PRICING AND EXECUTING IN REAL TIME

§Transparency in Pricing§Competitive Landscape§Tightening Compliance Regulations§Complex Market Drivers behind “Best” Price Practices

§ Price Change Pace Increase§ Drive towards Dynamic Real-­Time Pricing§ Better Analysis...Leads to More Changes

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THE WHY & HOW BEHIND DYNAMIC PRICING• Competitive alert re-­optimization• Defined competitive increase and decrease thresholds by competitor group• Trigger alerts and targeted item-­zone re-­optimization when key competitive prices change• Changes since last observation, include price change % increase/decrease, absolute price change increase/decrease.• Auto-­approval & export of price recommendations• Thresholds are defined at the zone/product hierarchy-­level for increase and/or decrease in revenue, increase and/or decrease in profit, and no constraints flagged in the price recommendation process.

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Near Real-Time Recommendations

DynamicRe-Optimization

Exception Management, Auto-

Approval & Export

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DRIVING TO REAL-­TIME DYNAMIC PRICING

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Auto Price

Changes

Optimize Competitive

Items

Exception Lists/Reports

Competitive Data

Cleansing

Sales, Price and Cost

Data

Competitive Data

Collection Auto Upload

Errors

Clean

Automated

Exceptions

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PRICING EXECUTION UNCOVERED

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§ Pricing Teams may have poor visibility into store execution of price changes;; ensuring tags are hung in the store on time

§ This creates a financial planning and forecast problem for the business

§ While most work to achieve these goals are carefully calculated in the front office, more effort needs to focus on the store execution to ensure company financial goals are met

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Pricing Team are given the following goal:§ Raise $1 million prior to Peak Season (Oct-­Dec) on inelastic items § Help pay for elastic key value items to be razor sharp on absolute individual price and total price index vs. competitors

§ Run the models, get approvals and roll out in 4 days

ESTABLISHING CORPORATE PRICING GOALS

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FRONT OFFICE EXECUTION

Pricing Team met with all corporate stakeholders and took down stated

goalsPricing Team ran modeling for all categories to look for margin

opportunities

Pricing Team got approvals in 3 days to roll out to stores

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POST FRONT OFFICE EXECUTION

Pricing Team exported to back office all suggested price changes (300 items)

Pricing Team promised $1 million to the businessThe Business had upcoming pricing pressure for Q4, this was a

mission critical goal

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STORE AUDITING POST REPORT

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§ Director of Pricing and several team members audited several stores over the next 7 days

§ Discovered poor store planning execution§ Very little tags placed on store shelf in time§ No auditing to know how many changes were completed!§ No way to estimate how much was made or if in compliance with Corporate Pricing!

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HOW DO WE FIX IT?

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§ Wireless-­ it’s key in your stores! § Electronic operations hub in your stores-­ regardless of the Front Office or IT task to push to stores

§ Color code tags for priority and ranking, eliminates guesswork§ Store Teams scan shelf location and price tags to ensure they are compliant with updated price changes

§ Ensure price tags are scanned and feedback/auditing loop sent § Gather daily reporting of % of tags hung per store/zone for suggested price changes sent to stores

§ Pricing and Finance teams now know if the tags are on the store shelf for profit/pricing image analytics

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Knowing the prices you want to change & actually changing those prices are different problems!

Approved Price Changes from your Pricing Strategies and the execution of those changes at the shelf may not

always be in sync

EXECUTION PROBLEM….

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PAIN POINTS & COST OF EXECUTION

üConnected shoppers expect price transparency between online and in-­store prices

üIn-­store price mismatch can result in fines and other severe civil penalties due to regulations$Retailers are constrained on how many price changes they can take per week, leaving profit on the table

If a retailer takes all recommended prices– 18-­35% of profit opportunities are on the table

$Example: grocery chain < 50 stores– 21,000 price recommendations – no constraints– $2.1M lost profit if prices taken over 8 weeks vs. immediately

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35

2.1

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Zebra Confidential

WHAT IF WE COULD…

•Make most of the price changes on the store floor with the labor we have?• Ensure compliance by activating the POS when the price changes on the floor?• Seamlessly deploy ESL (Electronic Shelf Labels) as part of an overall solution?• Improve the quality of our predictive analytics just by using the system?•Do this with minimal IT development effort?

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DYNAMIC PRICING & EXECUTION

The best practices in dynamic pricing with the best practices of

price change execution...out-­of-­the-­box

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THE VALUE PROPOSITION

The Right Price at the Right Time at the Right Place• Price Management planning ensures proper pricing, tagging and signage• Sales and margin lift based on proven pricing analytic models• Time savings via employee task managed price changes• Compliance with laws on the shelf edge and at the POS

– Price Activation changes the prices on the floor with real-­time notification to the POS

• Compliance with corporate policies– Price change notification and enforcement via price activation feedback capability

• Integration with existing store applications without rip and replace– Ability to add mobile applications via Zebra Commerce– Ability for partners & ISVs to sell the mobile software solution

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PRICE CHANGE CURRENT STATE

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Corporate Pricing strategy

Labels mailed from HQ

Pricing file xfer to store

Labels distributed to workers

Or printed in back-­office

No visibility to when price labels are

changed

POS Prices updated via Corporate Scheduled Update

Retail Back Office

Workers affix labels

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PME – ZEBRA / REVIONICS SOLUTION

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Corporate Pricing strategy

Pricing Data xfer

POS Prices updated with Floor Change (ZCommerce)

Sales & Customer DataAnalytics & Forecasting

Compliance and Timeliness

Zebra CommercePrice Execution

Prioritized Price Change Tasks

Mobile Scanning & LabelingPrice Activation to POS

Send Task Performance Data

Zebra Commerce

Store Interface

Phase 2ESL

Control

Retail Back Office

Zebra Confidential

Zebra converts the physical to digital to help customers know the location, motion and state of assets, people and transactions throughout their value chain. Our solutions enable greater visibility, so businesses can make smarter decisions with more meaningful and timely information.

For more information on Zebra:http://zebra.comhttp://zebra.com/zebracommerce

Ensuring Retailers Price Smarter and Maximize Profitability through Dynamic Pricing

To be the retailer’s choice for best-in-class, shopper-centric, predictive analytics and demand-based optimization solutions that deliver faster time-to-value and achieve maximum ROI.

For more information on Revionics:

http://http://www.revionics.com/info@revionics.com

Zebra Confidential

THANK YOU!

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Todd Bernertberner@zebra.com

Joe McCorklejmccorkle@revionics.com

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