Price Points by Omnia Retail

Which categories experience the most price pressure on Black Friday? Hidde Roeloffs Valk explains his data analysis in this month's episode of Price Points. [00:00:09] - Grace Welcome to Price Points the podcast that...

Which categories experience the most price pressure on Black Friday? Hidde Roeloffs Valk explains his data analysis in this month's episode of Price Points. [00:00:09] - Grace Welcome to Price Points the podcast that examines the changing world of e-commerce one episode at a time. I'm your host Grace Baldwin. And today we're looking into the holiday season. We've officially entered to the busiest months of the year for retail with Black Friday just a few weeks away and the holidays right around the corner. So to help make the holiday season more profitable for you, we wanted to put together some content that will help you be more strategic in your game plan. This month you can expect a couple of things including a holiday Playbook a blog post about pricing for Black Friday and more. That all starts with the following interview, which I conducted with our consultant and pricing expert Hidde Roeloffs Valk. If you came to our REINVENT event a few weeks ago, you heard the news that Omnia started to excavate a gold mine of price market pricing data that we've had for the last several years, but haven't been able to access. We're starting to gather the first few insights from this huge data set and heeda has been instrumental and analyzing this data and turning it into actionable insights that help retailers and Brands understand the market a new way. For this interview I asked Hidde to run an analysis on some Black Friday data and the results were fascinating. It was really cool to see what hit a learned about Black Friday as well as hear more about what he thinks this year's holiday season will look like so let's just jump in and hear more about the date. Please enjoy this interview with Hidde Roeloffs Valk. Alright. Well, thank you Hidde for joining me in for squeezing minute me in before you go to New York. How are you today? [00:01:40] - Hidde Pretty good, and you? [00:01:41] - Grace I'm doing great. Um, so I wanted to talk to you a little bit about Black Friday and then also about our this new data project. So let's start with the data. What is this project? Where does this data come from? And why do we have access to it now as opposed to in the past? [00:02:00] - Hidde Yeah. This is historic data from all public sources that Omnia connects to. Of course, we have a lot of retailers and brands asking or requesting pricing data across multiple countries, but this was always processed in a daily sense to do Dynamic pricing to do Dynamic marketing to do some analysis on a daily basis, but not so much on a long-term multi-year basis. So our previous data structure was completely different and we took all this old data and restructured it in a new way for us as consultants, as marketing department, and sales department to look at this and provide more value in analyses, true analyses for our prospects and clients and anyone basically interested in retail for free to show yeah how important pricing and marketing is really for everyone. [00:02:57] - Grace Yeah. This has been a huge project that's been going on for the last six months, right? Or even longer? [00:03:03] - Hidde Yeah and during REINVENT we finally showed the first insights really the kickoff of doing more and more data-driven insights for for anyone related to to Omnia. I have to say it's all public data. All public sources that's been gathered over the last few years. There's no sensitive data. In here of anyone so that's an important thing to know. [00:03:26] - Grace Good, good to note that for sure. And so as a bit of a data data geek are you excited about this? [00:03:33] - Hidde Yeah. This is like a gold mine for us. We need to work on this obviously you need to. Have the proper tooling proper hypotheses to really grab the value out of this but this finally enables us to do so much more with the data that we have. Also thinking forward in the future is running new elasticity algorithm. Hopefully testing some machine learning stuff on this data as, yeah, the more data you have the better your algorithms can work and that's beneficial for for all of our clients, of course. [00:04:06] - Grace So what is actually possible with this data? [00:04:09] - Hidde Most notably for now, it gives really the ability to zoom both in so really digging deeper into certain categories or brands or clusters of retailers and Brands and seeing what's going on there. But also zooming out instead of looking at one day or a month. We can find a look at multi-year trends which really gives you a perspective on the retail market and there's insights in there that can you can also use in your strategy. So both both of those are really handy and that would be the first thing we're going to look at the easiest part just uncovering the top of the iceberg basically and after that we'll dive deeper and deeper of course, into this data. But there are so many possibilities that yeah, we haven't discovered them all but we can think of a lot of data-driven insights for our clients, automated advices and new algorithms in terms of price advices. [00:05:09] - Grace I know that I personally am really excited about it to start writing some reports and really create content that's really interesting and unique in that shows a whole lot more about what's happening in the entire retail spectrum. [00:05:23] - Hidde Yeah, yeah, so that will definitely be interesting. As we grow, this data will also grow so the more clients or the more our clients in terms of data request the bigger data warehouse or database becomes and the more we can give back to our clients. And also as a consultant of course is extremely interesting to finally test your thoughts or hypotheses you had about the retail market and test whether they are actually true and so far most of the hypotheses were actually true. So that's been pretty cool. [00:05:56] - Grace That's really exciting, it shows that you've sort of have an idea of what's happening. I guess. [00:06:00] - Hidde We somehow think we're we seem to be right. Yeah. [00:06:04] - Grace So I asked you to use some of this data and give some sort of analysis about Black Friday. Can you explain a little bit about what you actually did when I gave you that request? [00:06:15] - Hidde Yeah. So what we did was looking at certain categories. I did it all high-level. Just just for now we can probably give a deeper dashboard where you can click through the data yourselves in a blog post, but just for now we have gone on a highest level of category. Looking at how is the pricing pressure different in those categories and how have certain categories being reacting differently during Black Friday. So we can see exactly how many price changes were there on Black Friday compared to a week before that. And we also know whether it is a price increase or price decrease. Price decrease, of course, probably promotion. Price increase probably a margin optimization even during Black Friday. And what we see overall, is that more and more retailers and more and more price points, that's what we call a product of a retailer changing in price, more and more of those are changing and more and more retailers are reacting to these price changes. So that creates kind of a snowballing effect in in your data. and Overall this has been increasing but some categories have been increasing more than others. [00:07:31] - Grace Which categories is that increase really really? [00:07:34] - Hidde Most notably it's been the baby category and it's a very wide category. Of course. There's baby hardware, baby strollers, and everything in there. But also Beauty category. And that fits exactly with what we see in the markets that retailers see this pricing pressure is also increasing. These are also categories where consumers seem to be more aware of these price changes that it's that has benefits them to check prices, but also we can tie it towards Millennials who are having babies currently and are more aware of price and maybe yeah, maybe also less willing to pay the highest price. So this creates a urgency at retailers to really change their prices as often as they can. [00:08:26] - Grace So for babies it's there's more babies in the market. And do you think that for Health and Beauty there's something similar where more people are shopping? [00:08:35] - Hidde More people are shopping online for these these product categories. Yeah, that's definitely what we see are across the board and it might be interesting but we don't have that data, of course to see consumer data in this but our feeling is that definitely the growing part of the Millennials is causing this effect.. [00:08:53] - Grace So when you looked into this data, was there anything that surprised you actually? [00:08:59] - Hidde Yeah. Overall what surprised me is that there's also a lot of price increases during Black Friday. So this this can be due to multiple things. It can be that some retailers really price upwards during Black Friday. So they seem to have some margin optimization strategy that they think hey Black Friday already has a huge impact people will shop anyways, this is an incentive for me to grab more margin than normally, more than last week actually. On the other hand. It could also be that there's some automation strategies in here where retailers price upwards when others are out of stock, which makes sense with we've seen the summer, of course again with air conditioners and cooling fans whereas some reason retailers price upwards when stocks were limited. Makes complete sense from an economical point of view, of course where it's always supply and demand [00:09:56] - Grace Yeah, basic supply and demand. Yeah, and so the and that happened this summer actually? [00:09:59] - Hidde That happened this summer. And the last two summers but also seems to happen during Black Friday. Of course overall still price decreases are one to two times more often, but it's not necessarily that it's all price decreases during Black Friday. So also for your strategy you should take that into account and look at that during Black Friday as you might leave money on the table if you're not increasing with the market. [00:10:04] - Grace That's pretty interesting. It's a pretty interesting idea. I hadn't even really thought about that. Do you have any sort of numbers about how these categories are changing so like what the percentage of price changes are? [00:10:36] - Hidde Yeah, so these baby and beauty categories, they changed more than 27 percent of the of the products changing price. [00:10:45] - Grace And that's across the whole market? [00:10:47] - Hidde Across the whole market. Yeah, so it specifical retailers can be high of course, but the price points so if specific product of a retailer about yeah 27 percent change in price in the week of Black Friday. And that's quite interesting. It was more than toys actually, which is traditionally a very important category in in this Black Friday to to Christmas and in the Netherlands of course Sinterklaas, but these categories have catched up [00:11:14] - Grace Were there any numbers about health and beauty? [00:11:19] - Hidde So yeah both were 27 percent this last year. More than toys which was 25%. [00:11:26] - Grace Okay. So these are obvious. This is obviously from the last two years. Correct? Yeah. What is what do you think that means for this year's [00:11:36] - Hidde Yeah, so I expect really to have these categories even more increasing. There's a clear trend over the last two years that they they've increased in the amount of price changes also in the percentage of price changes. Computer electronics is always the highest and all over data. It seems to be the most pressured in pricing and has the most price changes. So I expect that to increase a bit more last year. They they increased from 32% to 36% in in price change, which is huge as more than one in three products change in price across the board. [00:12:11] - Grace And that's consumer electronics? [00:12:12] - Hidde Yeah, and there's millions and millions of products, of course in there. So that's that's very interesting but not surprising. [00:12:18] - Grace And just that's just the number of products that change that's not a number of products that go up or go down. They just change. [00:12:25] - Hidde Yeah, yeah. [00:12:26] - Grace So you expect more you just expect there to be an increased number of price changes this Black Friday. [00:12:32] - Hidde Yeah. Yeah. Definitely I expect these these categories to continue catching up with electronics. So some categories might even hit hit above 30% currently only electronics above 30% but could be that baby and and sports and beauty could hit this 30% which is crazy. Instead of one in four products it's one in three products almost. this is interesting for retailers and consumers as they need to be aware of this for their strategies and buying or for their own prices, of course. [00:13:04] - Grace Are there any other categories that you expect to see high number higher than average number of price changes? [00:13:11] - Hidde Yeah, one other is sports travel outdoor category, of course with the winter coming up, but also overall this is an increase in category in the amount of price changes that we see. [00:13:25] - Grace But so the price. The increase hasn't been so drastic as baby and health and beauty? [00:13:31] - Hidde No. [00:13:32] - Grace And so thinking about increases versus decreases you what's the let's what do you mean by this 20% of the prices decrease? [00:13:43] - Hidde Yeah. So all in all, we've seen that a lot of prices decrease during the Black Friday week. Of course, you do promotions heavily promote it so across all products. It was around twenty percent. So all categories and some categories higher some categories lower but overall one in five products change in price. [00:14:03] - Grace That's insane. Yeah, like that's a real and it's... How can retailers actually stay on top of that? [00:14:12] - Hidde What is very important is make sure you have the right data for your site and you make sure you have the right data sources where your consumer is looking for these products, but also where your competitors are active. So choose to right data sources. Also during this this Black Friday some prices go up some prices go down . So some competitors go up some competitors go down. So on a product combination level with the competitor you need to know where to react, where to pick your battles. Basically maybe sometimes you don't want to go down maybe sometimes you want to go up and sometimes you need to go up or the whole market is going up. Then you need a high frequency of these updates because during these these days or weeks, every hour products can go up, products can go down, and you need to know whether you want to go up or down. So you need full automation and you need a higher frequency than normal, I would say yeah. [00:15:09] - Grace And do you have any advice on knowing where to react and when not to react. So how do you actually choose that battle? [00:15:16] - Hidde Yeah, you need to decide that in your strategy in these weeks. So maybe particular sub categories where you don't have a focus leave that out. Or maybe make combination deals that nobody has. So combining products or it's hard for the consumer to compare but also hard for your competitors to compare. So it's more and more steering your assortment that's going to be very important together with the right price strategy during these weeks. And it really helps to already think about that now instead of on that day, of course. [00:15:49] - Grace Especially considering there's this new Google data that's showing that 40 almost 40 percent of people have bought gifts already before Black Friday for the holiday. So even the weeks leading up to Black Friday are really important. And so if you're a customer of Omnia, for example, they can also reach out to you and say hey, can you help me a little bit? [00:16:07] - Hidde Exactly exactly. We can definitely talk about getting them to right data in order to be successful during this Black Friday. [00:16:14] - Grace Perfect. All right. Well, I think it is there anything else that you think that we've missed? [00:16:19] - Hidde No, not for now. We're going to dive deeper into the Black Friday data and hopefully afterwards to do a little summarization. [00:16:30] - Grace Well, thank you Hidde. I'm really excited about all of the hard work that you've done and took into analyzing this. I'm really excited about the future. And then if anybody wanted to reach wants to reach out to you, I will leave your information in the show notes. [00:16:44] - Hidde Awesome. Thank you. [00:16:44] - Grace Great, thanks! So wow. Thanks again for listening to Price Points. I really hope this episode gave you some inspiration on how to tackle your Black Friday game plan. If you'd like to talk to Hidde, you can reach out to him at hidde at Omnia retail.com or via LinkedIn. He has a wealth of knowledge about this topic and is happy to talk data and pricing with you at any time. Even if it isn't about Black Friday. If you'd like to chat with me, you can also find me through the same channels. That's Grace at Omnia retail.com or via LinkedIn. For now though. I hope you have a great rest of your day and a fruitful holiday season. See you next month on Price Points SHOW NOTES: Omnia was founded in 2015 with one goal in mind: to help retailers take care of their assortments and grow profitably with technology. Today, our full suite of automation tools help retailers save time on tedious work, take control of retail their assortment, and build more profitable pricing and marketing strategies. Omnia serves more than 100 leading retailers, including Decathlon, Tennis Point, Bol.com, Wehkamp, de Bijenkorf, and Feelunique. For her clients, Omnia scans and analyzes more than 500 million price points and makes more than 7 million price adjustments daily. Website • LinkedIn Music: "Little Wolf" courtesy of Wistia TO CONTACT HIDDE ROELOFFS VALKA: Email: hidde@omniaretail.com LinkedIn: Visit here TO CONTACT GRACE BALDWIN: Email: grace@omniaretail.com LinkedIn: Visit here

Are your private label products over (or under) priced? Hidde Roeloffs Valk, Solution Consultant at Omnia, explains how a reference pricing strategy helps you optimize your private label products and keep them at...

Are your private label products over (or under) priced? Hidde Roeloffs Valk, Solution Consultant at Omnia, explains how a reference pricing strategy helps you optimize your private label products and keep them at market-level prices. [00:00:10.590] - Grace Hello and welcome to price points. The podcast examines the changing world of e-commerce. One episode at a time. I'm your host Grace Baldwin. And today we're talking about strategy more specifically we're going to talk about reference pricing. So a few weeks ago we published a blog post about reference pricing but since it's such a fascinating topic I also wanted to do a show about it to me reference pricing is a blindingly simple solution to a problem that a ton of retailers face. It's one of the solutions that's so simple it's no wonder that nobody really thinks of doing it. In short reference pricing is a great strategy for any retailer who makes a private label product and wants that product to be competitive on the market. Traditionally stores haven't been able to use dynamic pricing on products like these because the G10 for that product doesn't exist beyond that store. Reference pricing makes it possible though with a simple three step process First you need to find a product that's similar to your own to serve as a reference point. Second you need to determine the relationship you want to have with that reference product. Third you need to put the G for both products and that relationship in the form of a business rule into your dynamic pricing system. And let the tool take care of the market pricing. So see what I mean when I say it's actually pretty simple. I sat down with the author of the blog, Hidde Roeloffs Valk, one of our solution consultants here. If you listen to the podcast for a while you've already met Hidde. But if not know that he is obsessed with anything to do with pricing and is exceptionally passionate about his work. You can learn more about him in price points Episode 2 and I'll include the link to his post in the shownotes. In this conversation we talked more about reference pricing, where the idea came from, what kinds of categories it works best for and more. So please sit back and enjoy this episode. I think you're going to like it. Thank you for joining me again about this [00:02:09.950] - Hidde No problem. [00:02:10.660] - Grace And so yeah. Again I want to talk today about reference pricing. So we've talked about this in the past and you wrote a blog post about it. And I'm just curious. So what exactly is reference pricing and why would a company actually want to use this strategy? [00:02:29.180] - Hidde There's a challenge within retail or basically in pricing where no products are directly comparable and there's companies that want to have a pricing set based on their competitors. That's also in a previous blog post competitor based pricing fairly commonly used. It's easy to, use it's simple. You just need the data and the tool, obviously. But let's say I'm selling a Samsung TV as a retailer. It's easy to match that Samsung TV one to one like apples to apples to the same Samsung TV sold at another retailer. So that's competitor based pricing in a very short sense But what if you sell your own products or have products that can't be matched, can't be compared in a one to one comparison. Then what can you do? You need different data points to steer on, to base your price on, and one of those is reference pricing. So what you do is basically for a product that's hard to compare, you make it comparable. You refer the price of one product to the price of another product that's not directly comparable. In short that's reference pricing it's used a lot in private label products for instance but can also be used in matchable products or unmatched products, but for private label it's it's a very good one because it also places you in terms of value in a relative distance towards known products. Let's say I'm making my own TV. I know, yeah quality is about 20 percent difference or 20 percent less then I'd like my price also to be 20 percent less than a famous Samsung TV for instance. So I'd refer both in quality and in price towards other other products and thereby making it comparable. [00:04:29.120] - Grace And so by that you mean so you take the GTIN of your product and then you do it within the system you reference it to the GTIN of another product that's sort of comparable. [00:04:38.660] - Hidde Exactly. So there's some manual work involved there's no algorithm that I know of that can do this for you. There's a lot of factors at play. Buyers and category managers are really the product experts in this and you need their opinion on this. I don't think data scientists know the products very well they know the data very well and there's so much subjective about the quality of a product that this cannot be captured currently in algorithms in my opinion. So there's some manual work at the start involved. Every product that you want to apply reference pricing to needs to be linked to another product. But however it is applied at some of the retailers I know and they've had great results because in the end if you're selling private label products your margins are often higher there. But people forget that the price is relative. [00:05:33.290] - Grace Some people you mean by people you mean within the retailers or you mean consumers. [00:05:39.410] - Hidde Yeah consumers don't forget it. Consumers shop around they shop for advices they Google reviews and in these reviews sometimes it's referred like, "Hey, this product is better than product X," and that's kind of stuff. So why wouldn't you refer to price then towards that product. So yeah it's it's they would be the people would be buyers and category managers that would set they are experts and hopefully in accordance with the pricing manager ideally. [00:06:12.880] - Grace And then I think another thing that's maybe worth touching upon is what do you how did you come into reference pricing? [00:06:20.010] - Hidde It's basically an idea I had about three years ago working with the first pricing implementations here at Omnia. And it. Yeah. I said earlier it combines value based pricing which I did often at my previous company and competitor based pricing where Omnia is of course an expert in, and this finally combines those two worlds. I've advised multiple clients but since this year some clients have done it and that that has made us quite enthusiastic about it because their results were great. We can't disclose any numbers about that but they were really really happy about both revenue and margin impacts. [00:07:03.170] - Grace So like if you had to give a scale of 1 to 10 and happiness where would you put them? [00:07:09.480] - Hidde An 8. Yeah yeah. [00:07:11.950] - Grace And did they, did they come up with this independently or was it something you advised. [00:07:16.070] - Hidde The interesting part was they came up with this independently. So we didn't even advise it. We sometimes mention it in meetings but it's not something standard. We only mentioned it when we feel that is needed to mention it as it's quite an advanced really advance dynamic pricing strategy and it does take some time where people first want to focus on getting their grasp on dynamic pricing. But I think if you're really searching for a next phase target in dynamic pricing this would be something really ideal. Or if you're struggling with your own brand products and really having to question how do I price them what what can I do or what should I do. It might be an ideal strategy if you're having a hard time selling those basically and it's low risk because you have a lot of margin left if set up correctly you can take it within small phases and not have a huge price distance yet. So with the right guidance the right tools yeah, it will have no negative impact on on your margins. [00:08:26.680] - Grace Is this a common practice already? [00:08:29.650] - Hidde It's not really common. So I think there's multiple retailers that can benefit a lot from this, doing it on the short term as not a lot of retailers do it. So you have quite some advantage over there. It does take some time but it can be, as a margin optimizing strategy, I think it can be really really helpful. [00:08:50.260] - Grace And it just it really takes more time in the beginning right. And then once you have it set up it's pretty easy to manage as any other dynamic pricing strategy. [00:08:59.110] - Hidde Exactly. So this reference pricing in general is not something that's standardly available within pricing tools as it's very customer specific. Also the tactics around it are customer specific. Am I gonna refer to one or more products? Which products? And how do I implement that? On which which frequency do I want to update those prices? Those are very very customer specific but in the end the rules can be made fairly simple you just need quite some data and quite some qualitative analysis from the experts. [00:09:37.950] - Grace The experts being the Category Managers and Buying Managers. [00:09:41.390] - Hidde Yes exactly. So it's working together of both maybe even data scientists pricing managers and the buyers and category manager who know the products and the market more than than anyone. So yeah and that's interesting to see. [00:09:56.690] - Grace What sort of products does this work well for? So we've talked about and the example you used in the blog post was about light bulbs. Are there any categories that this is especially useful for? And are there categories where it's not useful? [00:10:12.310] - Hidde I would say categories with, where people do extensive research. It's really really powerful because they're, the consumer's more aware of these differences and it's more transparent. So in lighting one light bulb might not be a huge purchase but in this particular example these are purchases where a company buys a thousand light bulbs and then these price differences add up. And then you look for quality differences perhaps and then these these things pop up. But I would say more expensive products where it definitely matters more for food people agree that it's just less quality and that's more fast moving so I would say for slow moving consumer goods as this works really very well. Of course it can work for both ends but I think the impact is higher. What I see across Europe is with more expensive products [00:11:10.250] - Grace More expensive slow moving consumer goods. [00:11:12.650] - Hidde Yeah. [00:11:13.030] - Grace Can you reference more than one product at a time. Or does that have to be one. So if I have my computer here can I also reference it to a Macbook and then also to a Samsung computer or do I have only pick one of the two? [00:11:27.300] - Hidde No definitely there is multiple ways to go around it. And I've seen different stuff. It's it's more of a tactic really and the implementation that you apply towards it. For instance you could map it to words several products and maybe take the highest or the lowest depending on that day's information that you have or maybe the most popular one according to some data. So yeah if you make if you have the data and you make a choice then you can automate that within your reference pricing strategy definitely. [00:12:01.410] - Grace So you can say okay I want to be between computer X and computer Z? Like I want to be exactly... [00:12:08.190] - Hidde Exactly, that can also be done. In theory you could also take the average of those three or maybe 10 percent of that and 20 percent of that. [00:12:17.760] - Grace It's a value gap analysis is the term correct. Determining okay. My I want to be price X compared to Competitor A. Like I want the price difference to be 20 percent. How do you actually go about building this analysis and determining this gap? [00:12:34.770] - Hidde So one way to look at it and that's some of my my previous work at Simon Kucher. Where they do lots of projects about value based pricing. And basically reference pricing is, in my opinion, one of the few pricing methods where you combine both. [00:12:50.520] - Grace So just to clarify at this point when Hidde says "both" he's referring to both value based pricing and competitor based pricing. [00:12:58.300] - Hidde And value based pricing starts off then with mapping out your assortment based on some characteristics. So first you look at what are the most important characteristics according to to consumers or consumer segment that I'm looking at. I would order those and maybe take the first five and order my product categories within value of those characteristics. For example something fairly simple a TV Samsung sells three TVs of the same product type for instance but it has a 50 inch screen, a 60 inch screen and 70 inch screens. Those are characteristics so you can already map out the value the 70-inch screens of course worth more than a 50-inch screen. So in that way you already see as sort of value map within your own product assortment and then it's key that for every step in that value map you can have a reference products where you'd say OK that 70 inch TV needs to link towards a 70-inch TV of a competitor. [00:14:06.170] - Grace OK. So you're just basically you just rank it sort of what consumers care about most. [00:14:11.770] - Hidde Yeah. And that would be the way to go. But in the end you need to do one to one pricing so you map out the most important characteristics and you'd look for those characteristics at a relative products and then refer to those in price so maybe the 70 inch TV screen of my competitor is made of plastic and mine is made of glass. Well that would be in my opinion a 10 percent price difference for instance according to the to the expert. [00:14:41.100] - Grace So you come up with this 10 percent and that's just based off of kind of you know the two materials and where you're where your commercial objective is and what you want your pricing perception to be. [00:14:50.190] - Hidde Ideally this would be based on a consumer willingness to pay. And that's the value that we're searching for. So whatever value the consumer attaches to it you want to to optimize margins optimize revenue. You want to "exploit" between brackets. Yeah between quote marks. Actually you want to exploit that and use that to maximize the pricing. Or just take the relative price distance. Yeah. Depends a bit on the situation of course. [00:15:19.350] - Grace This gets into a little bit into price perception. And so if you're a company and you're creating a lot of private label own label things. But the quality. So how do you manage your price perception if the qualities of say you make TV but also candles you're a big sort of overall retailer and the quality of TV is is lower than your reference product but the quality of like your candles are higher than whatever you're referencing. How does how do you manage that price perception? [00:15:50.040] - Hidde Well what you could have is those private label brands can have other names so maybe you're selling the private label really under your own name but selling the candles under a different name which has more of a premium feel and look to it. So that that's one way to manage it but also of course in terms of pricing. But ideally in pricing consumers get a feeling attached toward a certain brand. Same example of it in the car industry, you have Volkswagen and BMW everybody knows BMW is more expensive, more quality, high quality and Volkswagen is less expensive. So that's very deliberately done. And the same should be done by brands. It also fits into your marketing strategy your customer service et cetera et cetera. [00:16:41.540] - Grace Yeah. So it's really more of a it's a broad thing. [00:16:43.850] - Hidde Exactly. That you and you have. You have to consider a lot of different elements of it exactly as is as is known of course and pricing it touches so many subjects. That's why it also makes it a very interesting topic for people to work in. [00:16:56.310] - Grace And what are some KPI is that people can use to measure the effectiveness of this strategy? [00:17:01.530] - Hidde It depends a bit on seasonality but you can always take year year analysis of your own brands. You can check the cannibalization so what if I change the price of this products. Does it hurt the reference price product. So that's one thing to look at but as a standard we always advise to take into account year on year revenue volume and margin next to that. You can do some quantitative analysis asking your consumers what what their price perception is currently. So yeah on a regular basis asking your consumers for feedback. I don't think that's a that's something bad. And you know take the price perception for that into account. [00:17:42.230] - Grace And so do you have any tips for it. So if somebody wants to just get started with this what would you what would be? [00:17:48.120] - Hidde Step 1 start simple with just a few products and get the process working and get some initial results in fast. Because if you want to start with too many products you'd get lost and maybe the implementation then doesn't work and you don't know why the implementation because there's so many products involved. [00:18:09.770] - Grace Would you recommend starting with your high runner products or late or long tail? [00:18:13.790] - Hidde I would say long tail because they're probably not priced correctly. So yeah my advice would also always be to start fast as every day in pricing that you're not on your ideal strategy is day loss often in revenue and margin. [00:18:31.490] - Grace Anything else that you want to communicate about reference pricing? [00:18:34.520] - Hidde Anyone interested in this reference pricing can contact us and we'll be happy to help you set this up. [00:18:42.170] - Grace Perfect and if they if anybody has questions they can just send you an email or Linkedin, right? [00:18:46.130] - Hidde Yeah. Drop me an email. That's perfectly fine. [00:18:49.060] - Grace Perfect. All right. Well thank you so much. This has been really helpful and enlightening. [00:18:56.550] - Grace Thanks again for listening to PricePoints. I really hope you enjoyed this interview with Hidde. If you'd like to learn more about reference pricing check out the blog titled How Reference Pricing Keeps Your Private Label Products Agile on our website. If you'd like to get in touch with Hidde, feel free to reach out to him at Hidde@Omniaretail.com or by LinkedIn. You can also reach out to me at the same channels and my email is grace@omniaretail.com all the contact details as well as the blog post link are in the show notes. In the meantime though I hope you have an excellent rest of your day. SHOW NOTES: Omnia was founded in 2015 with one goal in mind: to help retailers take care of their assortments and grow profitably with technology. Today, our full suite of automation tools help retailers save time on tedious work, take control of retail their assortment, and build more profitable pricing and marketing strategies. Omnia serves more than 100 leading retailers, including Decathlon, Tennis Point, Bol.com, Wehkamp, de Bijenkorf, and Feelunique. For her clients, Omnia scans and analyzes more than 500 million price points and makes more than 7 million price adjustments daily. Website • LinkedIn Music: "Little Wolf" courtesy of Wistia TO CONTACT HIDDE ROELOFFS VALK: Email: hidde@omniaretail.com LinkedIn: Visit here TO CONTACT GRACE BALDWIN: Email: grace@omniaretail.com LinkedIn: Visit here