The perennial retail problem of identifying ideal price points and the exact timings of markdowns is being tackled head-on by Cyprus’s largest department store brand Ermes Group – assisted by IBM’s cloud-based, artificially intelligent pricing tool Watson Commerce.
Watson Commerce recommends the most appropriate pricing action based on a combination of metrics. It fetches web data including page views and cart abandonment, and mixes it with real-time popularity-monitoring data such as sales trends (online and offline) and competitors’ pricing of similar products. It then implements the pricing action according to pre-set brand rules.
For example, if sales of a fitness tracker have dropped, a discount may be suggested based on the key competitor’s recent discount and the pre-set rules of staying within a 1% range of the competitor’s pricing. Setting limits also allows the brand to ensure pricing suggestions only happen at relevant times. Once Ermes reviews and accepts the proposal, the new price appears online or on electronic shelves in-store within a minute.
Watson Commerce also offers a dashboard presenting both long- and short-term insights such as sales trends, revenue per quarter and margin performance. It also helps brands stay ahead of the curve by notifying managers of pricing strategy recommendations it thinks the brand should review for specific products that don’t have pre-set rules attached.
For more on innovating with agility, look out for the report Reflexive Retailing, part of our upcoming Liquid Retail Industry Trend, publishing on September 27.