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How European Retail Is Turning To Predictive Pricing With Yieldigo

Shopper purchasing behaviours are changing, and pricing dynamics often struggle to keep up. Yieldigo resolves all of this.

Yieldigo is a pricing optimisation platform that offers its customers the opportunity to make data-driven pricing decisions, and optimise their full range of assortments and pricing zones, based on customer behaviours. For METRO SK, Yieldigo has been a game-changer –an indispensable ally during a challenging period for retail and wholesale.

Time For A Rethink

The COVID-19 pandemic impacted METRO’s Slovakia business significantly –with the HoReCa segment contributing 45% of the business’ revenue, the closure of hotels, restaurants and catering outlets led to revenues being significantly impacted. As a result of this, METRO identified the need to adjust and optimise its operations.

Given the changing nature of the customer basket, the business needed to ensure it could find the right mix immediately, and be flexible enough to enact dynamic changes where necessary. Furthermore, METRO sought to define a new multichannel pricing architecture optimised for each distribution channel.

“At METRO, our business is based on two core customer groups – HoReCa and trader,” says Xavier Gardies, Purchasing Director and Member of the Board, METRO SK. “So, everything that can be segmented, is segmented, and you can target individual customers very precisely. But the COVID pandemic meant that we needed to redefine our pricing strategy very quickly. With the support of Yieldigo, we were able to implement a new approach.”

Developing A Solution

Working with Yieldigo enabled METRO to meet all of its ambitions. With regard to developing new customer segments, predictive testing of a number of different pricing strategies – including testing a number of ‘what if’ scenarios – enabled the business to tailor its segments accordingly.

“The major task when you introduce segmented pricing is to define precisely who are the customers behind each segment, because one segment might be highly price elastic, and focused on low price,” says Milan Havlíček, Sales Director, Yieldigo (pictured). “Yieldigo helps to facilitate the expected outcomes – it can tell you what you will achieve if you decide to be more or less price aggressive, and what will happen with your pricing index, your profitability and your sales.”

In terms of redefining the customer basket, Yieldigo developed data-driven price predictions for each segment, providing visibility on optimal prices for each customer typology.

When it came to developing an effective multichannel pricing architecture, a single pricing tool was developed that could manage multiple distribution channels, while as regards the development of a strong customer value proposition, Yieldigo worked with METRO to develop a ‘buy more, pay less’ promotional pricing module, optimising bulk promotion prices and ensuring a high value proposition regardless of the channel in which a customer is shopping.

“There’s a lot of work behind the development of ‘buy more, pay less’, as you need to define how many tiers you will focus on, and how many thresholds you define,” says Havlíček. “If you execute, what will be the outcome? We were able to determine this very quickly upfront, and activate it.”

A Positive Result

The net result is that sales at METRO SK are higher than they were in the corresponding period in 2019, while the ‘buy more, pay less’ model has proven to be margin accretive and well-established with shoppers.

“In 2020, we recorded the same sales as in 2019, despite the loss of the HoReCa market,” says Gardies. “One of the key factors driving the turnaround of the business has been the ‘buy more, pay less’ programme.”

To find out more, visit yieldigo.com.

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