Analyst Corner

Moving Markets and the Bottom Line

Categories: Uncategorized

Technology for the sake of technology may be appealing on an emotional front, but without an ultimate impact to the bottom line, it is a waste of shareholder value. Wall Street continues to develop a keen awareness of retail technologies that deliver on making retailers more profitable.

From the Street’s perrspective, one of the more appealing things about Price Optimization software is that it provides a measure of success. There is a clear link between Price Optimization software utilization and gross margin improvement.

Using the extensive collection of retail technology information contained in the IHL Retail Technology database we are able to look at several metrics as they relate to the rapidly growing acceptance of Price Optimization software as applied to the retail market place:

  • Published results tout gross margin improvements between 3% and 15% depending on the customer and retail segment.
  • Approximately 85% of the implementations today were in companies in excess of $1 billion in sales. Tier II and III retailers represent the remaining 15% of the population.
  • More than 80% of the Top 250 North American retailers either do not currently use or do not publicly ascribe to using Price Optimization software yet.
  • Currently Food/Grocery (31%) and Specialty Softgoods (28%) are the verticals representing the leading interests among early adopters, with Department Stores (13%) and Specialty Hardgoods (13%) next in implementations.

Because our early research has shown such promise, IHL has produced a new research study titled, “Price Optimization Software – A Retailer’s Guide,” to help retailers better understand the opportunity this software can provide to the bottom line.

The report looks at the major players in the industry, their market share, implementation lessons learned, and the leading retailers they are known to have as clients. We examine some of the early success seen in the industry as well as at the market for growth over the coming year. Not only is this report an excellent source for a rapid indoctrination into the subject, but also provides that insight into what your competition is or is not doing.

Recently, a group of retail technology analysts were meeting and talking about technologies that are real today and those that are just hype. The general consensus was that Price Optimization software was perhaps the single most compelling technology that is real today and can have the greatest impact on the financial performance of retailers for the next 4-5 years. When deployed properly, this software will improve their bottom line and ultimately their stock price as well.