A smarter way to deliver value
A grocery retailer competing against a strong low-price competitor used customer insight to refocus its price and promotions. Value perception was improved, without lowering prices across the board.
The highlights
The highlights
Drove sustained long-term sales growth
Matched price perception matched with low-cost competitor
Maintained a higher overall price index
Price cuts were failing to pay off
Despite investing millions into price reductions within core categories, one retailer found that its efforts weren’t resonating with customers. Rival retailers were also quick to match those price cuts, harming sales.
Data revealed what really mattered
Using customer data science, dunnhumby identified which products really mattered to the retailer’s most cost-sensitive customers. This helped to refocus price investments around those items specifically.
A value ecosystem was created
The same insights were used to build a “value ecosystem”. Rather than just cutting prices, the retailer invested in promotions, private label, assortment, and communications – creating a broader and more compelling proposition for customers.
Competitiveness and profitability were brought into balance
Data also enabled the retailer to reframe how success was defined. Gross margin dollars were prioritised over margin rate as a KPI. Satisfaction on customer promises was then tied to management bonuses.
A downward spiral was reversed
The impact of these changes was clear. Unit and sales growth recovered immediately, with visits and price perception trending from negative to positive over the course of just eight months.
Focused investments drive lasting change
Shoppers respond to clear, consistent value. When price investment is focused in the right places, it drives positive perception and long-term performance.
Explore our Price & Promotion solutions
