Center has tested an automated pricing system on the Competia platform

2021: Pilot Results

As part of the pilot project, Korus Consulting Group optimized the pricing of Center Corporation products on the Competia platform. According to the results of the pilot in one of the clusters, a statistically significant increase of + 6.2% to revenue and + 5.7% to profit was obtained. The project helped the retailer identify key areas for the development of pricing. This was announced by Korus Consulting on December 15, 2021.

Experts analyzed the historical data Center Corporations and formed a date set with a total volume of more than 2.5 billion lines and a horizon of historicity for more than 4 years. According to them - MLalgorithms they determined the factors affecting demand, the relationships between them, their importance - and regularly calculated the optimal prices for the buyer.

The company tested the effectiveness of the approach as part of a pilot project in which two groups of five stores participated, as well as an experimental cluster with a new format store. Experts of KORUS Consulting updated the data every two weeks, checked their quality and completeness and retrained forecasting models in the price optimization system for a more effective result. The process took one working day throughout the assortment (about 5 thousand sku) and the geography of testing. As a result, the pricing specialist of the Center Corporation received a finished tool the very next day and could independently work in his personal account and make a decision on recommendations.

One of the important elements of the project was the processing of prices for assortments with a tough competitive strategy, promotional positions and goods that are withdrawn from sale. The system did not change the prices for such a nomenclature, but at the same time took into account the demand for it when optimizing other goods and categories (cannibalization effects, substitute goods, etc.). Work with such goods was not taken into account when measuring efficiency - this made it possible to assess the net effect of regular pricing without the influence of external factors, such as promotions and the behavior of competitors.

The pricing optimization project has become a really valuable experience for us. We tested the solution on three groups of stores, and in all we received a positive average increase. But, if in one of the clusters we managed to record a statistically significant result, in the other two we encountered business features and a significant difference between stores. Given the statistical assessment of the significance of this effect, the results in these two groups suggest risks that we are not prepared to bear. As a result, the project helped us to identify development zones, primarily related to the pricing strategy and the architecture of information systems. For us, these are priority and pressing issues, after which we will return to the discussion of pricing optimization, "said Blokhin Yuri, Director of the Marketing Department of the Center Corporation.

An actively developing and volatile retail market requires flexibility and speed in decision-making from retail chains. The pricing policy directly affects the buyer's choice and, with the right approach, helps to increase key KPIs: revenue and profit. Automation of this process allows you to more quickly respond to the market situation and outstrip competitors who still set prices manually. We are pleased that the Center Corporation has gone the way of optimization as part of a pilot project with us and are confident that the results will help the network work even more effectively with customers, "said Sergey Vorobyov, head of Pricing Optimization at KORUS Consulting Group.

2020: Launch of Pricing Optimization Pilot

On October 15, 2020, KORUS Consulting announced the start of a pilot project to optimize the pricing system at the Center Corporation.

According to the company, as of October 2020, the market is changing dynamically, the ruble exchange rate, prices for goods, the behavior of buyers, and the actions of competitors are changing. To remain sustainable and grow in such conditions, companies need tools to manage revenue and profits. One of these tools is artificial intelligence in pricing (since price is one of the main factors that affects the buyer's decision to buy).

The choice in favor of technologies was made by the retail chain of household appliances and electronics stores Corporation Center. The Center Corporation has set itself the goal of increasing margin income by updating the pricing system. As a result of the analysis of IT tools, negotiations with consultants and reference visits, the retail network chose the Competia solution and the implementation consultant - KORUS Consulting Group of Companies.

As of October 2020, the companies signed an agreement for a pilot project, within the framework of which KORUS Consulting will demonstrate the effectiveness of the technological solution in the test group - several retail stores, while in other stores of the network the pricing process will remain unchanged.

Competia's neural network solution will process and analyze the historical sales data of the Center Corporation, find factors influencing demand, and offer recommendations for setting the optimal price.

The pilot project will last 60 days. With successful results, the next step will be the stage of business consulting, where KORUS Consulting will help Center Corporation develop a pricing strategy and further implement a solution for the entire network in retail and in the online store.

Modern IT solutions based on artificial intelligence and machine learning technologies automate the price optimization process. Such systems identify dependencies in or between categories, cannibalization of product groups or individual SKUs, market trends and dozens of other factors affecting sales. said Sergey Vorobyov, Head of Pricing, Department of Analytical Solutions, KORUS Consulting Group of Companies

Correct pricing is a question that cannot be solved only by expert method, the help of specialized platforms is needed here. It is important for us to find the right partner to implement the project: with a proven approach to project management, experience in the field of pricing optimization and the ability to integrate information systems into the business processes of large companies. We hope that KORUS Consulting is the right choice. stressed Anastasia Kharitonova, director of the store chain of the Corporation "Center"