The pandemic has been capricious to retailers – some sectors are hard-hit and suffering, while others flourish – notably grocery and DIY. But for all retail sectors, the frenetic pace of change in shopper, competitor and market trends poses challenges. What are the notable innovators in DIY doing to successfully address these challenges?
Understand that Change is Constant – and Structure Accordingly
The strength of the DIY sector in recent months stems in significant part from homebound consumers looking for ways to improve, expand or adapt their home environments, which suddenly must serve multiple purposes in any given household – home workspaces, remote learning campuses, and attempts to entertain and engage restless adults and children fighting cabin fever.
As the second wave of the pandemic careens toward unprecedented levels, new shutdowns are all but inevitable. This could either be grim news for DIY as more people face reduced hours, furloughs or job losses, and spending is curtailed across the board. Or it could be good news for home improvement if people once again find themselves restless, homebound and eager for a constructive project that improves their home or apartment. Either way, DIYs must focus on structuring for business agility to cope successfully with increasingly unpredictable scenarios.
“A recent survey of retailers found that 70% say they are willing to take humans out of key processes and rely on AI-powered automation and dynamic pricing.”
Fortunately, those who leverage optimization at any phase of the pricing lifecycle, from everyday price through end-to-end promotions, including trade funds deal management, and markdowns and clearance can harness current science-based capabilities to automate processes and scale at quantities and speeds that human-centric approaches can’t begin to achieve. A recent survey of retailers found that 70% say they are willing to take humans out of key processes and rely on AI-powered automation and dynamic pricing – those who embark decisively on that path can gain a potent competitive edge over those who hesitate.[i]
Be Aware of Shopper Tolerances and Expectations
Volatile conditions mean shopper price expectations change rapidly and in completely unprecedented ways. Shoppers have flocked online at a sharply accelerated rate, and their expectations of a fair price vary by channel. We recently commissioned a global shopper that reconfirmed that price continues to be the single most important factor to shoppers, followed by quality, with 34% of shoppers saying price is the most important contributor when deciding where to shop.[ii] And getting the price right is paramount. Across the board, shoppers reported heightened price sensitivity, and they are paying closer attention than ever to retail pricing. New waves of the pandemic will prolong job and income uncertainty along with extreme price sensitivity.
Fortunately, DIY innovators leverage real-time awareness of shopper demand signals and price sensitivities as well as competitive elasticities, down to the store/item/channel level. Robust science leverages these fine-tuned signals to make appropriate price recommendations suited to the shopper’s profiles, whether a DIY-er, professional builder/contractor or the do-it-for-me shopper. Forward-thinking home improvement retailers increasingly turn to proven science-based pricing and promotion optimization software to get the power of recommendations that factor in real-time as well as historical signals. The retailers can also select automated workflows to accept recommendations that fall within defined parameters, only flagging exception-based outliers for human review. Result: as conditions change, the price and promotion recommendations change equally quickly to meet current shopper expectations and business requirements.
While the retail environment will remain both challenging and volatile for the foreseeable future, science-based pricing can enable DIY to meet shopper expectations where it matters most and also execute with confidence to financial and business goals.
[i] Source: “Smart Pricing Strategies for the Post-COVID World,” Tim Denman, Editor-in-Chief, RIS News, June 2020.
[ii] Source: “Navigating Current and Future Headwinds: 5 Critical Pricing Lessons from the COVID-19 Pandemic,” a DemandTec-commissioned study conducted by Progressive Grocer, October 2020.