The system is based on price optimisation software from Khimetrics and NCR electronic shelf-edge labelling systems.
It will support the supermarket’s “high-low” pricing strategy, where it runs promotions that offer temporary deals and savings to consumers while maintaining margin on other items.
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The strategy would be impossible without the new technology, said Hung LeHong, an analyst at GartnerG2. “When Safeway decided to shift to high-low pricing, it effectively doubled the number of price changes headquarters staff make to several thousand items a week,” he said.
During the trial of the systems, which integrate with Safeway’s IBM mainframes, the company was able to respond faster to competitors and clearly identify a return on investment, LeHong said.
Safeway has been able to make changes more frequently, more quickly and over a broader set of merchandise, said LeHong.
Once the roll-out is complete, Safeway plans to investigate further capabilities, such as promotion optimisation, “happy hour” pricing and digital promotional displays to advertise markdowns.Scott Langdocs, vice-president for retail research at AMR Research, praised the initiative, saying Safeway’s IT department has continued to focus on improving the supply chain and rolling out cutting edge technology, despite uncertainty about a takeover bid from rival Morrisons, which was approved by the Department of Trade & Industry last week.