Having spent my entire career in the grocery industry, I’ve had first-hand experience with the challenges our customers face. I spent more than a decade as an IT director for a 14-store grocery chain. While that role presented plenty of challenges, it gave me insight into one of the most difficult roles in the grocery store—back office management.
The primary challenge in the back office is managing the dynamic price structure around an item. Many factors contribute to the continual changes in the price of an item. And since most traditional grocery stores have around 60,000 items on the shelf, pricing managers handle several thousand price changes every week.
Factors Affecting Grocery Price Management
Even seemingly small factors can have a big impact on item pricing. If gas prices rise, the cost of delivery increases, which the price of the product should reflect. To keep prices down for customers and maintain profitability of the store, pricing managers need to consider all available options.
Pricing managers need visibility into allowances or deals each vendor is currently offering. One type of deal is a minimum threshold purchase, also known as a scan back allowance or a bill back promotion. In this type of deal, the vendor will give grocers 70 cents back on every unit in orders over a certain quantity. The pricing manager must then determine how (or if) the price of the item should be adjusted.
The pricing structure is further complicated by the number of vendors offering the same item, which can change from week to week. Quickly identifying the vendor with the best deal on an item in a given week is important to maximizing profitability, yet viewing current offer prices across all the vendors isn’t always a simple matter. And if the grocer has multiple stores, there are also regional price differences to consider.
While stores purchase most items several weeks in advance, the back-office manager also needs to keep track of seasonal products, such as Valentine’s Day cards or Halloween candy. Pricing and availability for these products change dramatically as the holiday approaches—then plummet afterward—which is why seasonal products are usually ordered six to eight months in advance.
Once the price for an item is determined and the orders have been placed, the biggest issue the back office faces is maintaining data integrity.
How Retail Technology Can Help
One tool many retailers rely on to manage store pricing is NCR’s Power HQ (formerly Retalix HQ). I can tell you from personal experience this tool can handle almost any complex pricing situation a retailer can throw at it. However, its one hurdle is the complexity of the software and its user interface. When combined with our DMA Synchronization solution, Power HQ can address many of the pricing manager’s concerns, as well as reducing much of the complexity these managers associate with Power HQ.
Most back-office systems offer only a siloed view of data. DMA enables a global or flattened view of all vendors items and store. It can display the various prices of an item across all vendors—on a single screen.
It also streamlines the data flow, improves efficiency and accuracy, and easily communicates information down to the stores. For example, if a grocer is adding a new store, they need to send pricing information for all 60,000 items down to that store. This is what’s called a “full host load.” Traditionally, this would take up to 24 hours, but with DMA it can take as little as 24 minutes.
Once the new store is online, there is the data integrity issue I mentioned previously. With DMA, this problem is significantly reduced through automatic email alerts. Other features of DMA Synchronization include:
- Synchronization of store IDs with headquarter IDs
- Ability to conduct a full table refresh
- Use of triggers for miscellaneous batching
- Two-way synchronization, bringing store data back to headquarters
- Automatic restoration on store load failure
The challenge of managing prices and maintaining integrity of store data is one that grocers will always face. With DMA Synchronization, TRUNO can help make back office management easier.