Corporation ‘Centr’ is a retail network with 143 stores that sell household appliances, electronics, computers, and digital equipment. The company was looking for solutions that would enable them to enhance profit margin and identify the growth areas. Therefore, Corporation 'Centr' contacted KORUS Consulting which, in turn, offered Competera’s price optimization solutions.
As a part of the project, KORUS Consulting analyzed Corporation 'Centr's 4 years historical sales data and built a comprehensive ready-to-use data set with a total volume of more than 2.5 billion lines. Competera's algorithms processed these data to determine product elasticities of demand and set optimal prices across two groups of five stores and an experimental cluster with a new format store.
All data was updated and checked fortnightly to improve the prediction model accuracy. It took a day to process about five thousand SKUs in different locations which allowed Corporation 'Centr's pricing specialists to receive hands-on scenarios for effective decision-making in line with the latest data updates.
"It becomes increasingly challenging to keep customers satisfied due to the general inflation rise in the Consumer Electronics industry. However, our technology ensures favorable conditions for retailers and their customers. We regularly optimize prices by recalculating and updating more than 20 factors during every repricing cycle which makes products affordable for customers and protects the retailer's interests. In this way, Competera spurs sustainable pricing," comments Alexandr Galkin, CEO at Competera.
"Price analysis of the assortment with a rigid competitive strategy, promotions, and phased-out goods were the critical elements of the project. The system did not change the price for these goods but considered their elasticities of demand when optimizing other products and categories (cannibalization effect, substitute products, etc.). We didn't encompass these products when assessing effectiveness. It allowed us to evaluate the net effect of regular pricing, excluding the impact of promos and competition-based pricing," adds Sergey Vorobiov, Head of Price Optimization at KORUS Consulting.
Head of Marketing Department at Corporation 'Centr' Yurii Blokhin states that Price Optimization's implementation was a truly valuable experience for Corporation 'Centr'. The retailer saw positive growth dynamics in each test group. The cluster showcased statistically significant results. As for the stores, their outputs differed due to some business peculiarities. Given the statistical assessment of these outcomes, Corporation 'Centr' revealed some new risks that were not considered before. As a result, the business has recently taken efforts to improve their pricing strategy and built a more comprehensive and, therefore, effective pricing architecture. After that, the company will be ready to fully implement the price optimization solution.