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Discount stores are gaining market share, serving customers of all budgets.
But the competition is high, with frequently changing products. To keep up their game, innovation and a solid pricing strategy are crucial. TCS has helped Action Group, a fast-growing Dutch international non-food discount retailer, transform its pricing strategy using TCS Optumera™ AI-powered retail strategic intelligence platform.
Action is the fastest growing retailer in Europe. It has a simple and successful formula and operates a chain of 2,000 stores across ten countries in Europe. Action leads on price and differentiates on surprise. It is known for its affordable everyday products and its brand promise of ‘Small Prices, Big Smiles’ is powered by a unique business model of regularly refreshing 60% of its product assortment and making volume purchases through an efficient supply chain.
Unique business challenges
From a pricing perspective, Action’s unique business model comes with a few challenges.
About 60% of Action’s assortment is ever changing, which means every new item should have a competitive and an attractive price. It operates in many countries and must deal with inflation due to currency fluctuations. It must also ensure price parity across markets
"With increased visibility and competition, new markets, and currencies, we needed to update our pricing process”,
says Therese Opgenoort, Head of Commercial Development at Action, as they still relied on spreadsheets. According to her, there was enormous number of data, prices and competitors and human calculations were near impossible for ten markets.
To pass on best prices to customers, the retailer’s pricing strategy relied on store price checkers and third-party data. Action’s accelerated international growth in recent years brought added complexities to these processes. For each assortment refresh, in addition to setting initial prices for new items and repricing items carried forward from past seasons, it had to factor multiple aspects such as currency fluctuations, taxes, customer perceptions of value, and brand position in local markets.
Action needed a partner who could provide them a strategic intelligence platform for pricing, that could keep up with their ambitions.
“Action keeps on working, delivering its promise of small prices and big smiles everyday.”
says Therese Opgenoort.
Action partnered with TCS for its deep domain knowledge and vast experience in the retail industry, to reimagine its pricing strategy.
To execute the new process, TCS designed a new pricing solution using TCS Optumera™ which can drive intelligent and dynamic pricing. The platform triggers automatic price changes based on various scenarios like currency fluctuation, changes to cost price and expiry of competitor promotions.
TCS Optumera™ helps Action keep their brand promise of always offering quality against the lowest price possible
says Maarten Lieffijn, Pricing Manager at Action. He adds, “Without this solution, it would not be possible to expand to so many countries in such a short period while maintaining our price strategy in a scalable way.”
The platform links Action’s products to similar items, enabling better pricing of new products, and automates price changes aligned to policies on floor pricing and spiral pricing. Additionally, alerts are triggered when prices breach thresholds. The platform provides ‘what if’ simulations to help assess the impact of price changes before rollout, as well as visibility into the reason for each price recommendation, ensuring transparency in pricing. TCS Optumera™ helps Action to identify opportunities to balance the price early and mitigate foreign exchange risks
With the granular, real-time pricing intelligence provided by TCS Optumera™, Action can now roll out sharper initial prices and maintain price parity across items and stores to maximize revenue, while making each shopping trip a new experience with fresh choices.
“TCS Optumera™ is our own pricing platform which is capable of driving intelligent and dynamic pricing. Optumera helps to understand each product, its characteristics, trends, and several other factors to determine the winning price.”
says Srikanth VK, Global Head – Retail Products & Platforms at TCS.
The pricing process which used to be done manually was transformed by harnessing the AI capabilities of TCS Optumera™ platform. The platform enables automated workflow approvals and pricing agility, reducing speed to market, and positioning Action to quickly take advantage of market dynamics.
“From the beginning of our partnership, there has been a lot of trust, the collaboration was transparent, and we felt like we were in this together as a team developing and implementing the TCS Optumera solution”
says Maarten.
“The key to our success has been a very close collaboration, a culture of openness and the trust”
says Anil Rai, Client Partner at TCS.
TCS is a proud partner in the growth, expansion, and transformation journey of Action in Europe. Action keeps working to deliver its promise – SMALL PRICES and BIG SMILES, every day!
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