When ‘Average’ Isn’t Good Enough for Grocers

Grocery pricing shouldn’t be a game of “good enough.” Relying on averages for crucial business decisions like pricing is a recipe for missed opportunity and less-than profits. Instead, data-driven, science-backed price optimization will help you boost profits and keep customers coming back.
 

The Problem With Average

Average isn’t precise enough. For example, pricing engines built on averages might recommend $3.29 for a gallon of milk because it “works” across most locations. But what if that price is undercutting potential profit in high-demand locations, or if it’s alienating price-sensitive customers in another price zone?

The reliance on a generalized “average” is how you lose customers (or profit) without realizing it.

When you’re dealing with perishable goods, cost volatility and comparison shoppers, the gap between “average” and “accurate” adds up fast ...
 

Go Above Average: Embracing Optimization

The good news is that limitations to “average” are no longer a barrier to your success.

Modern price optimization tools let grocers ditch the guesswork and grow sales with confidence.

ClearDemand’s pricing platform allows you to model demand and calculate elasticity for any item and location, apply guardrails with your specific pricing rules, and simulate promotional outcomes. Instead of relying on heuristics and intuition, grocery pricing teams can move into data-driven, science-backed pricing designed to increase basket size, protect price image and adapt in real time.

How?

With optimization constrained by pricing rules. You define what pricing looks like for your business (competitive benchmarks, ending digits, margin floors). Then ClearDemand crunches the data to find the optimal price within your rules to balance profitability, competitiveness and perception.

Put simply: Your price rules are the boundaries, and optimization finds the product’s pricing sweet spot.
 

Building Blocks for Data-Driven Pricing

There’s great pressure facing grocery pricing teams. Less margin, less room for error and less time to react. Plus, shoppers are price-sensitive but brand-loyal. Layer in the need for convenience and competitors who change their pricing daily. The grocers that will thrive in this environment are those that recognize pricing as a powerful strategic lever, moving decisively beyond the limitations of average-based recommendations. 

To build strong pricing operations, focus on these capabilities:

• Elasticity: Understand how changes in price affect demand at the item and category level within specific locations
• Rules engine: Apply and prioritize rules regarding margin, competitive position, MAP, brand and size, and more
• Optimization: Use optimization’s algorithms to find the ideal price that achieves your strategic goals for profit, revenue and competitiveness
• Transparency: Gain visibility into the competitive landscape, enabling you to proactively adjust your rules and strategies to market shifts

ClearDemand brings together these elements in a pricing platform designed for grocery – giving you the confidence to price smarter.
 

The Impact: Results

We’ve seen firsthand how retailers that implement rules-based optimization are achieving significant results. For example, a regional grocery chain with 50 stores used ClearDemand to optimize pricing across its dairy category. By modeling elasticity and applying custom rules, it boosted gross margins by 3% without alienating price-sensitive shoppers. That’s millions in additional profit, without compromising its value-driven brand image.

The bottom line: It’s time to move beyond the limitations of “average” and embrace the power of pricing smarter.
 

Let’s Get Started Together!

Don’t let average pricing hold you back! Make sure your pricing decisions are backed by data and science. Let us show you how to streamline your category operations and enhance your pricing decisions.