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People will always want to shop and interact with others, so some elements of 2020 will only last as long as there is a virus risk, but for the most part, the trends that grew last year will stay in place, he notes.

Two examples of those newer trends? Grocery deliveries and curbside pickup. But keeping up with consumer demand for those services in 2021 and beyond, and keeping ahead of competitors, will require more food retailers to invest in software as a service (SaaS) or other forms of optimization technology. Price optimization remains one of the best ways to translate what consumers like into viable actions to stay relevant as trends evolve over time, Pavich says.

Such Saas technology can provide the benefit of a team to retailers that deploy those systems a reflection of a larger trend in the food retail world in 2021, as business becomes ever more digital, and new and real-time data points accumulate more quickly.

Retailers using SaaS pricing platforms also benefited from being part of a community of customers, having strategic partners who were able to monitor broader pricing trends and advise on best practices during very challenging times, Pavich points out. Imagine how Apollo 13 would have turned out if the crew didnt have all of their instruments, gauges, and a room full of experts and scientists in Houston advising them and helping them through their crisis.

Even if a particular food retailer isnt quite ready to deploy new price and promotional optimization strategy or has yet to earmark the money for doing so work toward that goal can be completed now.

The main thing that retailers should be doing is re-evaluating and refreshing their strategies to reflect the new realities of the current market, Pavich advises. This includes taking a new look at pricing zones, competitive indexes, KVIs, category pricing roles and other key aspects of their pricing strategy. High-quality analytics and industry best practices can help retailers build a pricing strategy to meet todays needs while driving sustainable value in 2021 and beyond.

Its hard to go even a day in the world of food retail without hearing about some new deployment of artificial intelligence, or fresh boasting about its near-term promise. That holds true when it comes to pricing and promotional optimization but dont make the mistake that everything is about AI.

Other technologies and processes also matter significantly, according to Maia Brenner, a data scientist for Tryolabs, a San Francisco-based data science consulting firm.

That includes machine learning kind of like the less sophisticated but useful older cousin of AI. Brenner says that mastering price optimization in 2021 requires food retailer tech departments to either master machine-learning techniques or find a partner that can. To do that, retailers need to break past old habits and embrace the future. Many grocery operators proved they could do that in 2020 when they went full force with e-commerce and associated services. Now, that same attitude is required for better price optimization.

Old statistical univariate forecasting tools arent sufficient, since forecasting future sales cant be predicted only by having a look at last years or months sales, Brenner observes. Without doubt, handling new real-time structured or unstructured data sources also helps anticipate the future and make better decisions. For instance, price optimization technologies can be powered up with computer vision and natural language-processing techniques by providing more information to perform better recommendations and personalization.

She also stresses the importance of investing in real-time data sources and crafting a pricing strategy with enough flexibility to be able to analyze all of that information and respond accordingly and before competitors do.

Another anticipated change serves to further underscore why food retailers this year need to take price optimization even more seriously than has been the case.

In 2020, consumers took fewer trips, went to fewer retailers and spent more per trip, notes Edris Bemanian, CEO of Engage3, a price optimization firm with offices in Davis, Calif., and Scottsdale, Ariz. During this period, prices skyrocketed due to lack of supply, and a significant reduction in promotions driven by the lack of supply. At the same time, a greater percentage of sales than ever before shifted to e-commerce, and retailers had to be more sensitive to pricing actions that would be perceived as unethical or unfair.

In 2021, according to Bemanian, ongoing economic constraints promise to place an even higher focus on price. Price optimization will need to shift to be able to deal with smaller trip sizes, households with less money to spend on each trip, shifts to private label, and smaller pack sizes, he predicts. Historical price optimization models of increasing price to drive profit wont work. Retailers will need to focus on the items that drive their price image to keep traffic up.

In other words, the future is pretty much now when it comes to better pricing and promotions. The race toward better optimization could even prove more important in the longer term than the fight to win over online shoppers.

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Getting Prices Right in 2021 - Progressive Grocer