technology's efficiency in recommending optimal prices
AI-powered algorithms enhance people with enormous computational power, making them very rapid and precise in their decisions. Such algorithms process massive and unyielding —for humans — amounts of data regarding hundreds of pricing and non-pricing parameters to suggest the optimal prices for the whole product portfolio.
The data AI needs to analyze includes competitive prices, customer behavior, the retailer’s past performance and current business goals, as well as weather and cross-price elasticity. Algorithms browse through the infinite number of pricing scenarios which equal the number of atoms in the universe to come up with the most beneficial one in real time.
When it comes to calculating optimal prices for private label items, the technology identifies latent clusters of similar products, and assigns such items to the most affinitive clusters.
What are the benefits for people? AI-enhanced managers switch to data-driven pricing, get ahold of unmanageable promotional campaigns, set the right prices for private label products which differentiate them from competitors, and finally have time to turn to high-level decision-making and improve customer experience. They become fully in control of the whole pricing process to ensure they gain more per product.
As Microsoft’s chief technology officer, enterprise, Norm Judah explains: “AI is about augmenting human ingenuity. Whether you’re a seller, a marketer, a lawyer or something else, AI will change the way you make decisions. It can help you navigate vast amounts of data and give you advice and recommendations about how to proceed. What you do with that advice is up to you.”
To sum up, it is extremely challenging to compete in the highly intensive U.S. grocery market dominated by tech-powered companies. But the technology behind the success of Walmart and similar players is becoming more advanced and available to more companies. So why not try out its proven potential to raise revenue and grow?
The market is transforming extremely rapidly. If you wait a little bit longer, the chances that customers will leave you forever are pretty high. Change or fail.