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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, Windeln.de, 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

 

 

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