PROFILE

Matthew Pavich

Sr. Director Retail Innovation at Revionics, an Aptos Company

Matthew is the Managing Director, Global Strategic Consulting at Revionics, an Aptos Company. He specializes in pricing and retail strategy, corporate strategy and customer focused solutions. Matt is a leader in pricing strategy development, business strategy development and overall corporate strategy. Matt has a strong merchant background and experience with C-Level presentations. He has more than 20 years of experience in retail, encompassing consulting, buying, pricing and marketing across a variety of retail verticals, industries and regions. Matt has lived and worked in France, Germany, Hungary and South Africa (with additional long-term engagements in other markets) and has more than eight years of driving customer-focused success at Revionics.

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  • Posted on: 11/18/2022

    Do retailers need to add chief trust officers?

    It seems to me that any company that needs a Chief Trust Officer may have already missed the boat. Trust is a cultural thing that should be embedded throughout an entire organization and embodied to its highest degree by all senior leaders. The best organizations should endeavor to be trustworthy to all internal and external parties and exhibit transparency in all facets of business. While it is true that cybersecurity and data privacy are important - they are merely qualifiers that shouldn't ever cause concerns. True trust comes from hiring the right people, establishing the right culture and ensuring that every interaction with customers is done ethically and honestly. Winning companies interact in a way that provides clarity and confidence to end users and consumers which ultimately leads to more satisfaction and higher loyalty.
  • Posted on: 11/09/2022

    Is transactional data the key to understanding retail customer behavior?

    Understanding the buying behavior of your customers is definitely foundational to running a successful business. Not only is it invaluable in understanding how they have behaved in the past, but it is the most critical input into predicting what they will do in the future. Every strategy should be heavily informed by customer data with the right sophistication and AI being used to identify key shifts and trends in how they behave coupled with the technology and processes to evolve accordingly.
  • Posted on: 10/18/2022

    How can grocers prevail in inflationary times without winning on price?

    During inflationary times, price perception is the most important thing that grocers should strive for and the ones that are doing so can actually turn the challenge of inflation into a great opportunity to grow share. Although there are many ways to drive great price perception during inflation, the answer is relatively simple: offer the right prices in the right location and through the right channels at all times to your consumers. In order to do this, the best retailers are using advanced analytics and pricing platforms to surgically balance pricing moves across all markets to ensure that consumers are getting the best prices on the right products. It also doesn't hurt to have a great private label assortment and find the delicate pricing balance between those items and their national equivalents. At a time when loyalties are at an all-time low, shoppers are paying attention and rewarding the retailers who focus on them and will continue to do so in the months to come.
  • Posted on: 10/17/2022

    CVS battles the ‘pink tax’

    I commend CVS's move to ensure that feminine hygiene products are priced fairly. It is obviously a savvy business move that will drive private label growth, targets their primary demographic, and helps create a larger contrast vs. their top competitor which has recently received some negative press for refusing certain products to female shoppers. Although it is the right business move, it is more important to call out that it is simply the right thing to do which is always the best move in the long run. While CVS should be commended, one should point out that they are not pioneers in the space as many sophisticated retailers are already using advanced pricing tools with rules to prevent discriminatory pricing and "pink taxes" along with all of the necessary dashboards and reports required to ensure that every shopper gets a fair price. Offering the right, fair, non-discriminatory price to all shoppers across all genders and demographics is a win-win strategy for the future and should be adopted (or better enforced) by more retailers.
  • Posted on: 09/09/2022

    Is ‘shrinkflation’ a better option than charging higher prices at retail?

    Consumers don't like, but generally accept raising retails during inflationary times. Shrinkflation, on the other hand, is less transparent and feels more like an attempt to shortchange you. It really depends though on the product and the degree of shrinkflation. Ultimately a lot of retailers can't really control shrinkflation and/or don't have the luxury of dropping a major national brand or CPG product. As such, retailers need to be extra diligent with pricing - particularly on products where shrinkflation has occurred. Using the right analytics and pricing tools and processes can help on this front and ensure that prices stay static (or possibly even decrease on key items) when sizes have been adjusted. Retailers with strong private label portfolios can leverage their position and choose to not pursue "shrinkflation" in contrast to national brands or to seize the moment and offer better deals on their products to shift consumers. Ultimately, when 48 percent of consumers say they'll switch brands when they notice shrinkflation, it's important to have a plan in place and even better to have an alternative, higher margin product with a lower price point.
  • Posted on: 08/15/2022

    Is inflation the biggest back-to-school story?

    I do believe that BTS is essential as parents will find ways to get their children what they need for school - even when it is not easy. It isn't, however, immune to inflation, because inflation inherently takes more money out of budgets by using it on gas, groceries, etc. which will impact BTS on the margins and lead to some shifts in behavior (i.e. buy a cheaper notebook or use your backpack one more year). Oddly enough though, the actual inflation in BTS categories YoY is quite small (per U.S. Bureau of Labor CPI) with boys apparel, girls apparel, boys and girls footwear, educational books and supplies and video and audio products all having somewhat negligible inflation (and in some cases deflation). This means that most BTS budgets will still get as many items as they once did if the right offers/decisions are made. I do agree with Dave that Amazon Prime Day is a good bellwether for BTS once one considers some key caveats. Ultimately, I do think the return to the classroom will be the biggest impact on this season's BTS as it fundamentally changes the demand for some key categories that became less relevant during remote schooling.
  • Posted on: 08/09/2022

    Should marketing have more control over pricing?

    Is marketing a critical stakeholder in setting promotional pricing? Yes. Should marketing "own" pricing at most retailers? No. I've helped numerous tier one retailers develop consumer focused pricing strategies and have seen success with many different organizational structures. Having said that, the best solution for retailers will always be to have a strong, centralized pricing team which uses the best analytics and solutions to develop a holistic pricing approach to support merchandising and marketing (i.e. brand) objectives. Merchant and marketing teams play fundamental roles in retail, but simply don't have the time, expertise or global perspective to own pricing. Even the best merchants don't have visibility to how their pricing actions can impact broader, more strategic pricing objectives - and the same goes for marketing. A great promotion should involve a very collaborative merchandising, pricing and marketing effort using the best analytics, processes and governance available to ensure they are offering the right price and the right message to the right consumers, through the right channels and locations on the best items while having a thorough understanding of how these promotions impact other areas of their business (i.e. category cannibalizations and affinities, brand image, growth of private label, etc.)
  • Posted on: 07/27/2022

    Can Walmart roll back inflation?

    There is no doubt that Walmart and Target can influence the market when it comes to pricing -- a large % of retailers include them in their competitive set and will move prices accordingly when one of them makes a move. There is a big difference though between taking down everyday "base" pricing on comparable items and running promotions and markdowns to clear through excess inventory on unique items. The best retailers are monitoring this very closely and know when and where to react appropriately. Ultimately though, the numerous factors driving inflation and the overall U.S. economy remain beyond Walmart's control. There are some positive signs that gas prices may be coming down, but there are also some long-term supply challenges such as electronic chips, fertilizer, and unfortunately grain -- which could lead to more inflation. The best any retailer can do is to closely monitor costs, competitors and demand shifts and use the best analytics available to react accordingly as the market evolves.
  • Posted on: 07/25/2022

    Are digital-only coupons discriminatory against the elderly and poor?

    If so, paper coupons are discriminatory against younger shoppers who aren't waiting with bated breath to get the Sunday paper and cut out the weekly coupons. The simple fact of the matter is that there are numerous ways to promote a product using multiple levels of technology. Sophisticated retailers use the best analytics to understand their customers and offer the right products through the right media and platforms at the right discount. They also leverage these capabilities to prevent truly discriminatory practices (i.e. prevent unintended price differentials by group/gender, etc.) It's also critical that they do everything they can to ensure that their apps/technologies are as user friendly as possible to drive better adoption across all age groups. Finally, they serve their most disadvantaged shoppers through charities, donations and community programs to help eliminate gaps between those who can afford certain technologies and those who cannot.
  • Posted on: 07/20/2022

    Will more Americans make e-grocery delivery a weekly habit?

    Online grocery should continue to grow - it's simply too convenient for people who remember how much time was spent every week shopping for food. Also, if my family is any indicator - it actually saves money because you're less likely to buy impulse items when purchasing online. Although this does present numerous challenges to retailers, it also gives them a lot of opportunities and a better set of more accurate shopper data than previously. This data can inform the best-in-class strategies that are needed to thrive in this new environment. One example of this is the ability to analytically identify better product substitutes (to prevent some of the head scratching ones that happen today). Promotions are also vastly different online than in-store and it's safe to say that traditional promotions (i.e. endcap placement) will need to be reconsidered to account for how people shop online. Tomorrow's winners are using the best promotional analytics and AI platforms to address this and further adjust as trends evolve. The list of things to consider goes on (operations, hiring practices, etc.) and on, but the best grocers are realizing that this channel is real and growing.
  • Posted on: 07/11/2022

    Should Costco raise its food court prices?

    It's okay to raise prices on food court items as they are not immune to the global inflationary environment and consumers are seeing higher prices in other cafe/restaurant/QSR environments. Just because it is okay, though, doesn't mean that it should follow the same rules as regularly stocked items in the grocery store (and other assortments) - food court item pricing actions need to follow a different set of rules and logic (i.e. less frequent price changes to name one) than other items. It also is true that a move from $2.99 to $3.99 is quite significant (>33 percent) and higher than inflation elsewhere. In all cases, it is critical to leverage the right analytics to understand where to raise prices and where to hold prices and to optimize accordingly to offer the right prices to consumers on most important items while covering or increasing margin elsewhere. Costco does have numerous strategic advantages when pricing vs. big box and supermarket competitors due to their inherent volume discounts and large private label penetration. Their membership approach also helps keep consumers loyal if they can effectively keep their trust with the right prices and promotions.
  • Posted on: 06/29/2022

    Will a gas tax holiday drive retail in the right direction?

    As others have stated, lower prices at the pump have historically put more money in consumer pockets and boosted spending elsewhere which should help a little. It should also reduce some of the supply chain expenses retailers are facing which could mitigate or hold off some future cost increases. One segment of retail that could benefit from this more than others are convenience stores as lower prices in gas will lead to more travel and traffic. It will also reduce costs for truckers which are a key customer segment. Coupled with some BTS tax holidays, it could lead to some higher demand days for some segments. Ultimately, it won't solve for inflation or high gas prices which are based on larger economic challenges and disruptions which retailers have been adapting to and will need to continue to adapt to.
  • Posted on: 06/27/2022

    Are outsized private label gains in grocery a foregone conclusion?

    With consumer brand loyalty at an all time low and inflation at the highest levels we've seen in decades, it makes sense that both retailers and consumers are shifting attention toward private label brands. For consumers, private label often offers the same quality (sometimes even better) at a lower price. For retailers, the benefits are even greater - not just higher margins, but more control over critical things like promotions and packaging decisions (i.e. control over shrinkflation decisions). In some cases private label even offers better supply chains. Private label provides retailers with an alternative option and a negotiating piece when national brands raise costs or run into supply challenges. The savviest retailers are aware of the great potential that private label has in today's retail environment and looking for every opportunity to grow that business strategically. The right analytics and pricing/promotional strategies can be key in this as well - sometimes something as little as shifting a pricing gap from 10 percent to 6 percent can shift demand from one brand to another. Even with national brands fighting back, it is likely that private label growth will continue to happen for the foreseeable future.
  • Posted on: 05/27/2022

    When the going gets tough, consumers shop dollar stores

    As inflation continues to impact consumer budgets and reduce brand loyalties even further, consumers will naturally shift into more affordable channels where they can stretch their budget on the items they care most about. The dollar channel has benefited from this - but even with this influx of consumer demand, they still need to be savvy and use a balanced, data-informed approach when deciding how to absorb or pass on cost increases to consumers. Fortunately, most indications show that they are doing precisely this and continuing to offer great value on the items consumers care most about while finding margin opportunities elsewhere. The marketplace is rapidly evolving and every retail segment needs the flexibility to respond accordingly but it is even more dire in a channel where the margins are pennies. Inflation doesn't appear to be going away anytime soon and other higher priced retail segments should pay attention and make sure they are taking a balanced, consumer-centric approach to their pricing or even more consumers will shift to the dollar channel.
  • Posted on: 05/09/2022

    Grocers fret over how to pass higher costs onto customers

    Grocers should definitely consider all of IRI's suggestions. On top of that, they should strongly consider how to leverage and grow their private label brands and further invest in the analytics to better understand their consumers and their competitors. The best retailers are turning a challenging inflationary environment into an opportunity to profitably grow share by using the best analytics and adopting an approach that focuses on providing their consumers with the best prices on the items they care about most. Consumers are watching, and keeping your head in the sand and hoping for the best is not going to cut it for retailers who don't adopt best practices.

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