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: 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.
  • Posted on: 05/04/2022

    Will ‘shrinkflation’ grow into a big problem for CPG brands?

    CPGs need to be really careful when considering shrinkflation. It’s safe to say that as much as consumers don’t like inflation, they are more adverse to shrinkflation. Inflation feels transparent and consumers are used to prices fluctuating due to channel, retailer, promotions, etc. but inherently don’t like it when one package once worked for their recipe and now they need to buy two. On top of that, when a national brand chooses to go the shrinkflation route, it gives retailers one more avenue to offer better value on their private label brands. CPGs and retailers alike need to be very careful and use the right analytics to best understand where they can and can't make adjustments on package sizes and pricing. When brand loyalty is at an all-time low, it is critical to fully evaluate all options using the best predictive and consumer based analytics and to not just chase margin - consumers are watching!
  • Posted on: 04/21/2022

    Are price freezes and pledges worthwhile in inflationary climates?

    Although messaging is important, it ultimately comes down to actions. Aldi has consistently been a pricing leader in the market and their ability to provide quality products at affordable prices to consumers is why people trust them when their grocery budgets are constrained and inflation is rampant. The best retailers are listening to their consumers and not just taking price increases during this highly inflationary period -- but evaluating the data carefully and strategically balancing increases on items less important to consumers while remaining competitive on the right products and doing so with surgical precision across zones and channels to gain share and profitability.
  • Posted on: 03/30/2022

    Can retail teach America how to recycle better?

    As many others have stated, recycling is indeed broken in America. Even well-intentioned people can often struggle to understand what goes in the trash and what goes in the recycler. It's a problem that needs addressing at all levels of society - education, municipal policies, etc. Retailers can help though. To start with, retailers can own their private label packaging 100 percent and can choose to use more compostable, recyclable materials while also providing better instructions. They also own their operational procedures and can choose to not individually wrap every single apple, kiwi and cucumber in a plastic bag when putting together a curbside order (I hate this and it is a waste of materials and labor.) They can create "refill" policies for certain items like beer growlers. They also control their pricing and promotions and can use those levers to increase their mix of more sustainable brands or ones with better recycling messaging. Finally, they can offer the very simple service of providing recycling bins for things that people are unsure of like lightbulbs and batteries - it's good for the Earth and also drives traffic to the store.
  • Posted on: 03/24/2022

    Petco CEO isn’t losing sleep over inflation

    Pet supply is in a solid strategic place. While COVID-19 had a different effect on every retail vertical, it remains a fact that the pet parent craze brought on by more remote workers is a trend that will last for a long-time. People with new puppies in 2020 and 2021 will still have a dog 10 to 15 years from now and will still need to buy them food. On top of that, people love their dogs and I must personally admit that I am quite the inelastic shopper when it comes to giving my sweet cavapoo a new toy or treat. Petco, however, is still not immune to inflation. PetSmart, Chewy's, Target, Walmart and Amazon all offer alternatives - not to mention the plethora of small, local pet stores which offer fantastic customer experiences. Petco still would benefit from following all of the right best practices and analytics - if not, they may continue to grow sales, but lose share in the end. A pet parent is a very loyal shopper if you offer them the right price on the right products - but they will definitely shift once they realize that saving $2 on a bag of dog food over the next 10 years can add up to some serious cash.
  • Posted on: 03/22/2022

    How can retailers fund strategic priorities as challenges abound?

    Although it sounds simple - the only way retailers can elevate their AI and analytics practices is to actually use more AI and analytics. If they need help embarking on the journey, there are numerous experts in the space who can help (my company alone has transformed countless retailers into AI savvy enterprises). As for where to start, I may be biased, but Gartner evaluated 23 AI use cases for retailers last year and ranked pricing as the one that was both the most feasible and drove the highest value. Harvard Business agrees and believes that a 1 percent improvement in pricing drives more profit than a 1 percent improvement in sales, variable costs or fixed costs. More importantly, it delivers quick ROI, which is why a lot of retailers who invest in an AI pricing solution are able to turn a quick profit in the first year which they can then use to fund more AI initiatives or other strategic priorities. Pricing also helps with the labor shortage as most retailers are wasting a lot of labor on ineffective promotions or sub-optimal pricing activities that can be readily identified and prioritized by a sophisticated pricing solution. The key is, retailers won't be able to fund anything if they don't start elevating their practices today -- their competitors aren't waiting.
  • Posted on: 03/17/2022

    What inflation-era consumer behavior should we expect next?

    The one behavior we can expect is that it will be different behavior than today and will continue to evolve as inflation and other disruptions cause consumers and retailers to shift their practices. One thing is certain - retailers who don't consider this shift will lose out while others will profit from listening to their customers. Consumers won't all do the same thing and every category is going to be impacted differently. The important thing is to build the processes, systems, and practices to react as consumers shift, so they can continue to find the best products at the best price through the right channels at all times.

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