PROFILE

Kevin Sterneckert

Result driven executive with more than 25 years of comprehensive retail experience. Previous roles include serving as a Gartner Research Vice President and lead retail analyst overseeing analysis of hundreds of retail-focused software solutions. Recognized expertise in helping retailers and software companies understand the possibilities of big data, the future of merchandising and the path to creating excellence in the supply chain. Other roles included senior director of global product strategy at Oracle Retail, and vice president of retail for DemandTec. Retail experience includes serving as chief information officer of a billion-dollar grocer, and managing the operations development in the US, as well as directing the supply chain activities in Mexico City, for Walmart Supercenters. Store operations expertise developed at H.E.B Grocery Company with several store department management positions and also managing the perishable pricing activities. As EVP of Predictix Marketing, I lead all internal and external communication and marketing activities.
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  • Posted on: 08/04/2022

    Are grocers profiteering from inflation?

    In a recent LinkedIn survey, I asked retailers how much of their cost increases due to inflation are being passed to the consumer. It’s worth noting: 95% responded that 100% of those costs are indeed being passed to the consumer. With inflation rapidly rising around the globe – cresting 7% in the U.S. (the highest in nearly 40 years), reaching a record high of 5% in the EU, and topping 10% in Brazil, for example – and rising over this trend could trigger a big disconnect between retailers and customers. For smart, data-driven retailers, however, inflation represents a great opportunity to capture new market share. If their competitors are passing 100% of the cost increase on all items to the customer, they haven’t recognized the nuances of today’s competitive landscape. But an intelligent retailer, who understands the price elasticity of individual products, can respond with surgical precision to the price sensitivities of their customers. In an industry where margins are razor-thin, personalizing retail prices at scale – the way Amazon does – could provide retailers a much-needed (and invisible) competitive weapon. This is an opportunity for a 2nd or 3rd retailer in the market to make positive price moves in the eyes of the consumer. For the savvy retailer, it’s key to look at the items most important – through the eyes of their consumers with high price sensitivity – and not pass 100% of the cost increases to the customer. The “Big Pass-Through” misses a unique opportunity for the intelligent retailer. Leveling the playing field Let’s not ignore the standards for the kind of pricing intelligence Amazon and other behemoths are setting. Amazon changes prices more than 3 million times each day. With intelligent merchandising and AI-driven price automation, a fraction of the cost increases are added to price – for example, on items to which customers are less price sensitive. This is an opportunity for a 2nd or 3rd retailer in the market to make positive price moves in the eyes of the consumer. More than ever, consumers are looking for value and ways to stretch their shopping spend. “Who will give me the lowest overall price and the most value,” they ask. They will make changes with whom they shop based on the total basket price, and this is often measured by the price image of items they care most about. This requires a granular and precise understanding shopper demand, in real-time, and careful analysis of price elasticity and sensitivities to price changes as well as halo and cannibalization. It requires holistic views of the store, more than just the category or demand groups. When you have these capabilities, you can remix the competitive landscape. Even if you end up with the same margin, you will be more competitive in the marketplace and you will gain market share. The winning strategy in an inflationary market is to use inflation to your advantage and to do something different. You know your competitors are just passing the cost increases directly to the customer. Other than the behemoths on the global shortlist – Amazon, Walmart, Alibaba, for example – few retailers are finding ways to intelligently manage inflation through improved retail price strategies that reduce passed-on costs to customers and the items driving price image. This gives the savvy retailer – one who has invested in intelligent and autonomous merchandising – a distinct market advantage. The counterargument? Some retailers say what they’re trying to do is recover the margins they’ve had to eat because of competitive environments. Retailers who are doing this will find there will be no change in the competitive landscape going forward. If they’re intelligent about how they manage inflation, and how they manage competitive pricing, they will likely gain market share, where many are not thinking about inflation strategically. The power of now Typically, retailers will do weekly – sometimes daily – price changes. Many price optimization solution providers do not update data models as new data arrives. This means they are not adjusting to the current market reality. At DemandTec, our models are evaluated and refined as new data is received. Our data models are constantly learning and adapting and changing, so they’re always the most current reflection of consumer demand to drive the most accurate understanding of consumer behaviors. It could be new competitive data, or weather data. It could be new transaction data; it might happen daily. It might happen weekly, but as new data arrives, you will want to know, and your models should reflect these changes as they happen. Who has this capability today? Again, the behemoths have it. But now that the technology is being shared openly – i.e., democratized – it will soon become table stakes for retailers. And the demand for this is now. Record inflation is already upon us. And will be for the foreseeable future. Time to strike the iron, it’s hot.
  • Posted on: 09/02/2021

    Can marketers successfully shift focus from acquisition to retention?

    As a rule of thumb, it's easier and less expensive to grow the transaction size/value of existing customers. This is an approach at which many consumer insight companies direct their focus. The reasoning is that if you can encourage the customer to buy just one more item, spend just one more dollar, profitable sales growth occurs ahead of the industry average. However the current state of the market suggests that there is much more available to every retailer than directing focus to primarily growing current customers. Yes, it might be more complicated to attract new customers, and it may take more effort and creativity than required in the past. A large share of customers are looking for new forms of convenience, service, and value. A healthy balance of marketing to existing and acquiring new customers delivers a winning result. I do not see an advantage in turning activities away from acquiring new customers. The value of a new customer who becomes loyal represents far more revenue growth opportunities than the incremental growth of existing ones. If anything, this may be the right time to double down on acquiring new customers.
  • Posted on: 12/27/2017

    What retail apocalypse?

    Ok, so we all know there was hype in the "apocalypse" reporting that we were subjected to in 2017. I do want to note, for many retailers, the apocalypse was very real -- according to bankruptcydata.com there were 662 retail bankruptcy filings in 2017 up 30 percent from 2016 -- there were more than 7,000 store closings. Where the reports got it wrong was trying to claim that retail is dead ... really? Online sales for the 2017 holiday season were up 18.1 percent according to MasterCard. I agreed with Paula and Greg and frankly a number of other students of retail -- yes, bad things did occur and will continue to occur, but retail is not dead. Retail as we knew it has dramatically changed and, for the most part, changed for the better. It will soon be a distant memory to wonder if a retailer has what you need in stock, or to make a purchase only to find out later that the item was sold for a lower price somewhere else, or to need to stand in long lines to return merchandise. These and other very non-customer friendly activities will be behind us. Winning retailers fixed these terrible occurrences and many others. The apocalypse is real for those who refuse to know their customer and adapt to changing needs and wants. Generally, winning retailers understand they must do better to secure a share of spending and generally, retailers who are winning are doing just that. I predict 2018 will be a breakout year for retailers that achieve increased customer satisfaction.
  • Posted on: 10/15/2016

    Should retail prices in-store be the same as online?

    I have great respect for those who have contributed to this discussion thread. I know many of those who have opined. Here are a few things to consider. First, when have we ever had a situation in retail when we could say pricing was easy? I believe it's easy to say that the price should be the same across all channels. Second, Amazon changes three million prices every day. If you are a retailer who has a strategy of competing aggressively with Amazon that results in price changes every day or every hour or even every minute, what retailer has the labor budget in stores to make sure that the shelf price matches the digital commerce channel price. ESL is not the answer; how would you explain a price that is changing right before the customer's eyes? So, given these very real challenges that can not be overcome, the retail price can be different across channels. Generally, many believe that consumers expect the same price across all channels, however, actual consumer behavior demonstrates a very different attitude toward consumer price preferences. Channel independent pricing presents a significant competitive weapon requiring clearly stated intentions with customers and proper supply chain coordination. The concept of consumer-centric retailing advocates an alignment of strategy with a careful examination of the consumer and their behaviors and expectations. As companies focus on channel pricing strategies, winners will listen carefully to how their current and future customers wish to interact with each channel. They will include the expectations of value, promotions and individual offers that are extended through each channel. The very definition of listening to the consumer has expanded beyond the purchase behaviors of the four traditional walls of retail. The pursuit of listening to the consumer should include a detailed and sophisticated analysis of unstructured social data (available in blogs, and social networks). Remember as a consumer sees a brand, like Sony, they are presented with number of channels for a single SKU. The last place a retailer should want to be is looking in from the outside from a purest point of view that causes all pricing across all channels to be identical. True consumer behavior shows the consumer does not expect consistent channel pricing and a strategy to do so may limit competitive opportunities to reach available consumers. With new sources of consumer information (ie. social media) representing a direct channel of insights, retailers will unlock a key price optimization opportunity. Consider this question. Should you charge the beer consumer a different price at 5pm on Friday vs. 10am on Tuesday? Today, promotions are largely dependent on retail circulars that communicate the promoted goods at the same price during the promotion period, yet consumer demand changes throughout the promotion period. Retailers should consider using price and promotion optimization solutions across all channels of commerce. Significant and reliable returns are well documented within the brick and mortar channel and similar benefits are also available to alternate channels of commerce. Finally, the impact of channel specific pricing strategies will impact demand by channel and the supply chain must be prepared to respond to these changes in demand. The consumer is the winner when pricing is flexible and focus on behaviors and expectations. Offering a one size fits all does not reflect what the consumer REALLY wants as measured by demonstrated behaviors. Personalized pricing is beginning to take hold and I expect more retailers will follow over the next several years.
  • Posted on: 05/27/2016

    Does Walmart need fitting rooms?

    Costco?
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