TRACKING PRICES

DAN ALAIMO

As economic pressures continue to place margin demands on supermarket retailers, new Web-based software technology is being used to make sure pricing strategies are being optimized. Keeping track of your competition's prices is one way to make sure this is happening.

Among retailers who have recently implemented new software applications to help track prices of its competitors are Ukrop's Super Markets, Richmond, Va., and two chains operated by Associated Wholesale Grocers, Kansas City, Kan. -- Falley's and Food-4-Less.

Moreover, officials from ACNielsen, Schaumburg, Ill., recently told SN that it plans to make available to supermarket retailers its Wal-Mart Channel Service.

Matt Bell, spokesman for ACNielsen, said this service provides retailers with comprehensive data on Wal-Mart's trending, shares, prices, volumes, retail conditions and insights.

Bell said ACNielsen started this service after Wal-Mart decided to stop sharing its point-of-sale information with the market research industry this summer.

ACNielsen delivered its first sales information and insights from the Wal-Mart Channel Service Oct. 25, Bell said.

Meanwhile, Ukrop's launched a new pricing program this month that will enable it to track competition more closely and more efficiently on the Top 500 selling products, said Jeff Thomas, director of category planning and analysis, Ukrop's.

Previously, Ukrop's would get competitive pricing information about one competitor on a monthly basis from global sourcing and supply chain management firm QRS Corp., Richmond, Calif., Thomas said.

Ukrop's also sent its own people out to check prices.

But it would take several weeks to get the data into reports that its category managers could use, he said.

Now with the new pricing system, calledTradeweave Retail Price Analyzer, from QRS, the operation is more streamlined.

"We are getting prices from all of the major competitors in our market and we are getting them on a weekly basis," Thomas said.

Meanwhile, at the end of last month, AWG announced it went live with a new pricing solution called HeadquartersPrice/Merchandise Manager (HQPMM).

HQPMM is from TCI Solutions, Irvine, Calif..

It is handling all of the pricing functions from five Falley's and 26 Food-4-Less stores in Missouri and Kansas.

The new system automatically generates new retails for all DSD, dry goods, perishables, HBA and general merchandise.

The retails are then transmitted directly to the in-store, POS systems. The software also creates batches for printing new labels.

Moreover, the new system Falley's and Food-4-Less is using has a module called competitive pricing that is wireless and Web-based.

Store officials can now go into a competitors store and, using a hand-held Palm, record prices.

Later these prices are downloaded into the central data system.

Gene Alvarez, senior program director for META Group, Stamford, Conn., said the Web-based price tracking is definitly and up-and-coming trend.

"Our research indicates that grocery retailers are seeking more information on product pricing strategies as market pressures continue to reduce margins," he said, in a prepared statement.

"We believe that this environment will generate demand for solutions that enable organizations to better understand the relationships among price, product categories, promotions and market demand," he added.

Officials at Ukrop's said a key to making their new system affordable was focusing on the Top 500 items, rather than a broader scope of products.

But it's from those top-selling items that consumers form their pricing impressions about stores, Thomas said.

"These are the items that really drive overall price perception," he said.

To support the retailer's advertising strategy, the new program has the ability to differentiate regular prices from feature prices, he noted.

"You can go back and see how frequently individual products from the Top 500 were promoted by a competitor, and you can also understand the price point they use when they promote those items," Thomas said.

This is especially important for branded products.

"Cheerios is going to be there. The key items that are in those people's shopping baskets are the ones that we as a retailer need to be particularly sensitive to," he said.

Other examples he cited were branded 2-liter soft-drink bottles, 32-oz. Kraft mayonnaise and Kraft macaroni and cheese.

Results from the program are not yet available, he said.

However, the reaction so far from category managers has been very positive because of the timeliness of the information and the availability of new reports.

The retailer can set up the rules of the program so that it reports back on specified exceptions or differentials.

"If you want a price on a key item to be within a dime or a certain percentage of a competitor, the program will flag you if you go outside of that range, and you can take some kind of action," Thomas said.

This saves time from the data collection effort -- and from having to wait for reports -- and also saves money, he said.

Meanwhile, QRS has researched when competitors do their price changes within a weekly cycle.

"They check the prices the first day that a particular organization has their price changes and it is posted on the Web the following day," Thomas said.

But more importantly, the program helps Ukrop's walk that fine line between aggressive promotional pricing and maintaining margins.

"You are doing the pricing mainly for financial reasons, but you also want to reach a level of consumer value. If you don't have timely data, your price could be too high or too low.

"If your price is too high, then the consumer might see you as not providing value. If your price is too low, you might be seen as providing a really good value, but you might be getting into some financial issues," Thomas said.

The 25-store chain had worked with QRS on beta-testing the new program, noted Darby Miller, vice president, industry marketing for grocery/food service, at QRS.

Currently, Ukrop's is the only retailer using this particular program.

Thomas declined to reveal how much the service costs.

Ukrop's accesses the program through an ASP (application service provider) basis. This means most of the software and data resides with the vendor, and the retailer uses an Internet connection to reach it.

This new program is an attempt by QRS, which has provided similar services for 18 of the Top 25 supermarket chains, including Kroger, Safeway and Albertson's, to reach the small-to-medium-sized players, Miller said.