At Your Convenience: Holiday Stationstores Collaborative Journey to Proactive Pricing and Ongoing ROI

Transcription

1 At Your Convenience: Holiday Stationstores Collaborative Journey to Proactive Pricing and Ongoing ROI

2 Holiday Stationstores Dean Solyntjes, Director of Pricing and Business Support, recalls some of the nuances inspiring Holiday s initial quest for a solution, recalling, I think we were very fortunate with organizational buy-in in that we didn t have any significant resistance at all. The whole initiative was really based on our CEO s project sponsorship and vision. He recognized the value in distinguishing a product s price sensitivity and carefully adjusting prices without negatively affecting sales. At the same time, some markets are more sensitive than others. Not everything needs to be priced the same in every market. He understood the greater opportunity to accurately and profitably harness the potential, but to effectively realize the vision we needed the right science and technology.

3 HIGHLIGHTS A recognized leader in the convenience store sector, Holiday Stationstores operates more than 500 corporately owned and franchise stores throughout 10 states in the northern United States. The company has enjoyed consistent annual growth, both in the form of adding new locations every year as well as steady sales growth. Holiday attributes much of its success to its long-term relationships with its customers, partners and team members in addition to a dedicated focus on continuous improvement and efficiency. Holiday Stationstores has successfully leveraged Revionics Price Suite since From the beginning, Holiday has been one of Revionics valued lighthouse customers, forging a strong, collaborative partnership and high level of engagement to drive innovation as an industry leader. Using Revionics, Holiday has: Achieved a new level of discipline in pricing processes. Partnered with Revionics to develop multiple purchase incentives for base price. Using t-log data, examined historical multiples purchase behavior in-basket as a function of price, subsequently predicting the propensity of customers to up-purchase to a multiples offer when given an incentive to do so.

4 GOALS Solyntjes was instrumental in leading the transformational pricing solution initiative. The Revionics solution was very intuitive and easy to use, and we thought the science was extremely solid. At first we weren t sure about the software-as-a-service model because we didn t have a history there, but the more we learned, the more we decided that it was the best approach for this solution. What we really appreciated about Revionics was the transparency of the price recommendations. It was just extremely easy to understand why the price change recommendation was being made. Also importantly, we felt very comfortable with the organization and the Revionics people we were partnering with. The partnership endures, with Holiday Stationstores continuing to renew and serve as a valuable customer voice and collaborator in steering ongoing Revionics solution innovation. As part of the solution implementation, Holiday worked with Revionics pricing strategy and science experts to co-develop specific tiered pricing capabilities that Holiday identified as fundamentally ingrained within its business model from a promotional standpoint. This functionality has since been rolled into the standard Revionics price solution. Solyntjes explains, An example of our tiered pricing is buy one for $1.69 or buy two for $3.00. It is somewhat different than the grocery model where you could buy a single item at the multiples price. In our case, the tiered pricing means you would have to buy that second item to get the discount. We partnered with Revionics to develop the capability of modeling and predicting the outcomes with tiered price items. The system can now identify current tiered pricing items as well as those for future tiered pricing consideration. For items that are pegged as being on the tiered pricing model, the system would impose optimized price both for the single price and the multiples price. It really is utilizing the transaction log (t-log) data to understand what percentage of customers will move on to that second tier at various price points, notes Solyntjes.

5 OBJECTIVES Holiday Stationstores has successfully reached its objectives of proactive pricing and now has visibility into shopper price sensitivity, competitive price positions, cost changes, seasonality and other relevant data points to influence profitability, competitiveness and demand. In addition, the company has established enhanced pricing processes. We talk about how Revionics process between the pricing team and category managers. This resulted in a vastly improved workflow to achieve price optimization while easing category management s burden. Solyntjes notes, We used the workflow process, so our pricing analyst is in the system screening all of the price change recommendations and putting those we wish to take into a Slava Gendlin, Pricing Analyst at Holiday, summarizes, The category managers are using the solution, but I feed them key information and streamline the pricing recommendations. It would be difficult with our setup, as lean as we are, to do what we do on the pricing side without Revionics. We couldn t do it. has really brought discipline to our pricing processes. While the previous process was somewhat reactive, these days pricing decisions are made based on facts and not just on intuition. We believe that Revionics effectively merges the science of price optimization with the art of category management, Solyntjes states. Holiday Stationstores created a dedicated pricing team and implemented a streamlined recommended status. This makes it easier for the category managers to quickly go through their recommendations and make the final determination on whether or not they want to take the recommendation. So all of the heavy lifting is really done by the pricing team, which definitely simplifies the process for the category managers. Holiday Stationstores was one of the frontrunner retailers to use zone groups

6 OBJECTIVES in the solution, and it has been a differentiating factor for competitive pricing. Holiday designates different zones for different products to drive insightful price optimization. Holiday was a major contributor into store zone functionality, and in part as a result of this collaborative innovation, today zone group functionality has become standard within the Revionics solution. Holiday leverages Revionics not only across all corporate stores but also across its franchise stores. The franchise model follows the same zone structure as the corporate stores. Franchise owners determine their own store zone assignments, but any price change recommendations that the corporate pricing team makes also go to each of the franchise stores. CHALLENGES Before the Revionics implementation, Holiday Stationstores did not have a dedicated pricing team. Pricing responsibility resided within the category management function. Typically for the industry, the category managers would set prices based on whatever information they had, such as market intelligence, margin goals and recommendations from manufacturers. If tasked with increasing margin, their response might be to raise prices across the board without the finesse and science offered by Revionics. Holiday needed new processes and a strategic solution that leveraged business rules, science and data to recommend optimal prices and forecast the effect on consumer demand.

7 RESULTS Holiday Stationstores has achieved the gross profit improvement that it anticipated from its Revionics technology investment. In establishing a successful fact-based methodology and the organizational structure and processes to determine optimal prices, the company is extremely impressed with its results. Holiday now benefits from: Increased understanding of Key Value Item (KVI) pricing along with leveraging margin enhancements of less sensitive items Improved zone structure to take better advantage of competitive positioning Fact- and science-based pricing decisions and enhanced alignment of pricing with category strategy Ability to compare and analyze outcomes of different pricing strategies and allow for what-if scenarios Solyntjes notes, We have results that exceed our cost of the system by a multiple factor. We routinely measure, and we have recouped the cost of our investment several times over. We are definitely getting value from Revionics. Holiday Stationstores forward-looking plans include potential expansion into Revionics promotional pricing innovations as part of Holiday s continuous improvement journey. About Holiday Stationstores Holiday Stationstores is a recognized leader in the convenience store industry with over 500 stores throughout 10 states in the northern tier region of the United States: Minnesota, Wisconsin, Michigan, North Dakota, South Dakota, Montana, Wyoming, Idaho, Washington and Alaska. Holiday Stationstores continues to provide customers with a shopping experience that is unique to the convenience store industry...big stores, wide aisles, wide product selection and friendly employees. Easily accessible from many major highways and interstates throughout the Midwest and northern states, Holiday Stationstores features a variety of food offerings from their exclusive Holiday Pantry sandwich and salad line. Major brand products from Coca-Cola, Pepsi-Cola, Kraft, Nestle's, Kellogg's, General Mills, Campbells, Tropicana, Gatorade and more provide their customers with the quality product they want...every day!

8 Revionics is a global leader in profit optimization services and solutions. Our unparalleled analytics and science serve as the backbone of omni-channel retailing to help performance-driven retailers execute profitable pricing, promotion, markdown, and space decisions with predictable business outcomes. The result: achieve speed to value and ROI, improve margins, drive top-line sales and respond faster with precision. Revionics SaaS-based model integrates analytics, technology and services to deliver an unmatched advantage for retailers Competitive Insights, Price Suite, Promotion Suite, Markdown Suite, and Space and Assortment Suite all from a predictive platform to drive long-term growth. Trusted by some of the most profitable retail brands, Revionics optimizes across 18+ million products and more than 2.6 billion item/store combinations are modeled weekly. Learn more at