A (Good) Radical Change Is Coming To Retail Pricing Jobs

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For the past decade, the job of a retail pricing manager has been growing unimaginably more complicated. Unlike some 10 years ago, today's managers need to analyze tons of internal and external data and answer endless questions before making every single pricing decision. Who are my true competitors for this product? What are my key value items? How much higher/lower should my prices be as compared to my competitors? The list goes on.

What makes everything worse is the speed of decision-making. You've probably noticed that e-commerce has made retail extremely dynamic. As customers, we can choose products and compare prices immediately. For retail teams, this means that decisions have to be near-real time.

Thus, the whole pricing process looks like riding a bike while juggling millions of colorful balls. And the bike is on fire. And you must reach your destination at any cost without dropping any of the balls.

But there is a good thing. As the needs of retail are growing, technology is also developing. Artificial intelligence is one of the latest technological advancements that many refer to as "game-changers." Proving the point, a report published by PwC called AI "the biggest commercial opportunity in today's fast-changing economy" across many industries.

Retail is no exception. In fact, it is among the eight industries PwC believes are poised to benefit from AI the most thanks to major productivity benefits of AI adoption.

From Spreadsheets To AI

In retail, pricing is a very promising area for AI-enabled optimization. Most retailers still use Excel as their go-to pricing tool, but it shouldn't be the only option anymore — it can make everything too slow and prompt inaccurate decisions. In the world driven by massive amounts of data and contexts, humans — even powered with Excel — are no longer physically capable of processing all the necessary data with the required speed, let alone come up with the right data-based pricing strategy for every one of their tens of thousands of products.

One may see this as a liability. But in fact, it is a gigantic opportunity for companies that have exhausted all other ways — like launching new brick-and-mortar and online stores or categories — to grow. For them, pricing is an untapped source of future profits. Taking a step from traditional pricing methods to AI could bring a significant financial boost. From my experience, it can give a double-digit revenue and profit increase.

But how exactly does it change the life of pricing managers? Metaphorically speaking, they can go directly from the inflamed bike and juggling to a comfortable, stress-free spaceship ride.

From Routine To Strategy

Just like in any other industry, AI takes up all the routine and time-consuming tasks like data collection and analysis. Afterward, it provides insights and price recommendations to pricing managers. What used to take hours can now take minutes. One of our clients has been saving up to four hours per repricing cycle per pricing manager.

This means that managers can finally focus on strategic and high-value-adding tasks and quickly make far more data-driven decisions.

It is truly good news for retail teams and retail businesses. As AI-based automation becomes more widespread, demand for a completely new set of skills, including soft skills, and a new mindset is growing.

Note For Leaders

Naturally, such a drastic change can be uncomfortable, especially for managers who have been in business for years. In fact, according to a report published by Deloitte, as many as 47% of surveyed executives found it "difficult to integrate cognitive projects with existing processes and systems." I would add it can also be difficult to integrate them with the team. Some pricing managers double-check the accuracy of AI-powered price suggestions before applying them. Others deny them completely, and it's a natural reaction.

Leaders take note: Digital transformation and gearing up for AI as part of the process usually requires time and education. The switch cannot happen overnight. The good news is that AI can bring fast results, which makes it easier to persuade your teams. From my experience, it usually takes up to six weeks to set everything up and see the first results.

Team-wise, AI adoption calls for at least three things:

• Engaging employees in testing the new technology.

• Giving them a chance to make mistakes as they are getting used to the new reality.

• Educating them through a series of workshops every step of the way.

Some managers are afraid of machines replacing them, but they shouldn't be. As McKinsey Global Institute chairman and director James Manyika wrote, "The future of work looks set to be not a tale of machines replacing humans, but of machines complementing humans in the workplace."

AI can let managers grow professionally. With all the data processed and insights provided, they will still need to make the final decision, develop a winning pricing strategy, implement and course-correct it, as well as analyze its results. In other words, AI can walk managers through every pricing decision and show the best possible pricing scenario, but it won't take the final responsibility or authority. It will still be up to humans, now powered with tech-induced superintelligence.

The wonderful era of boosted productivity is coming to retail. Tech-enhanced managers can finally let go of boring routine, focus on much more engaging and challenging tasks, and benefit businesses even more.

All managers need is new skills, a new mindset and support from their leaders.

Form:forbes.com