Grocery retailers need to improve their pricing decisions

A global study of 750 grocery decision-makers reveals key challenges in meeting customer expectations. In our blog post, we take a closer look at pricing and how it is impacting customer experience in the grocery retail industry.


Pricing has always been a key strategic area in retail, but in the age of price wars and digital transparency, it has become a real differentiator. Through the rise of the discounters and online retailers, the buying power pendulum has swung in favour of the shopper. Price too high and you will put customers off, price too low and those already tight margins are squeezed even further. To survive in these hard times it is essential to determine the right price for each individual product at certain points in time, based on machine learning algorithms.

Spotlight on price optimization

Our global research revealed that grocery retailers across the globe are taking strides to get their pricing right:

  • 52% of directors confirmed they have invested in price optimization in the last two years
  • 29% confirmed that they will invest in price optimization in the next two years

 However, 25% still feel they need better price optimization to deliver a good customer experience.

 Despite many grocery retailers automating their pricing, most feel they are not pricing appropriately, which is surprising. The research also reveals that a majority of grocery retailers still do not have adequate price optimisation in place.

  • 54% do not automate pricing
  • 27% set prices manually in the UK

Price Optimization, Machine Learning, Customer Experience

Only by delivering automated decisions based on predictive and data driven applications that measure price elasticity, will pricing strategies work. This is where advanced machine learning algorithms will separate the winners and the losers.

Speed is key to making pricing decisions and if they are being made too slowly, it will act as a critical barrier to the delivery of good customer service.

Striking the right balance to meet KPIs

Retail is about striking the right balance between pricing, stock availability and waste. Accurate pricing based on real-time data and influencing factors such as weather, vacations and the right stock availability helps maximize revenue and margins and enables retailers to markdown pricing before risking write-offs. In an industry characterized by fine margins, the line between waste and pricing is crucial to get right and shouldn’t be left to guesswork. Only 46% in the UK say they price based on external factors, such as competitor pricing.

The fine line of getting the balance right between pricing and stock availability is crucial. To combine the speed of decision making with KPIs for margins, volumes and markdowns, the key strategic areas of pricing and replenishment must be based on data analytics to ensure the customer expectations are met.

Learn more about Price Optimization in our brochure!

Download the full findings and whitepaper here.

food waste, price optimization, customer experience

Prof. Dr. Michael Feindt Prof. Dr. Michael Feindt

is the mind behind Blue Yonder. In the course of his many years of scientific research activity at CERN, he developed the NeuroBayes algorithm. Michael Feindt is a professor at the Karlsruhe Institute of Technology (KIT), Germany, and a lecturer at the Data Science Academy.