Case Study: Leading Colombian pharmacy chain implements Pricing and Space Planning modules
- One of the leading pharmacy chains in Colombia, owning 960 stores nationwide and selling more than 20,000 products, pursued a digital transformation that would allow coping with typical retail problems and increasing its profitability.
- To achieve this objective, the company implemented Prisma Pricing and Space Planning modules in July 2020, and with a team of two Price analysts and two Category Management analysts, they carried out the transformation that currently means the administration of thousands of pricing suggestions for the entire chain.
- Throughout this case study, we pretend to showcase an example of business consulting activities, definition of strategies, and implementation carried out by Prisma in conjunction with a retail company to accomplish the launch phase of the platform.
The implementation of Pricing module required action on the following aspects:
- Store segmentation considering format, region and socioeconomic level of the area.
- Machine Learning models were used to validate purchasing patterns and established the respective price zones.
- Identifying the “KVIs”.
- Differentiated strategies were established for each product and trade area, which made it possible to measure price sensitivities more precisely.
- Products with low sensitivity to price changes were identified in order to improve margin.
- Web scrapers were developed to capture market information on a daily basis.
- Prisma Mystery Shopper APP was implemented and throughout “weekly missions”, we captured competitors’ prices in each “trade area” for “KVIs” products.
- Related products were identified to establish parenting rules and accelerate price changes, maintaining consistency and reducing errors.
- We defined the “Role and Strategy” for each product category to establish consistent target margins.
- We developed an ad hoc feature to automatically and securely manage medicine prices’ regulated by the National Government. This feature would import the current government resolutions and generate alerts if a supplier is selling at a price above the regulated one, and establishes maximum selling prices allowed by the Government, eliminating the risk of fines and penalties.
- Automatic importers were developed to process the pricing lists of national and regional suppliers in a timely manner and thus be able to generate suggestions detecting changes in costs or taxes, avoiding margin losses.
And from the Category Management perspective, the following actions were carried out:
- Analyzed stores design and furniture to standardize the display.
- The definition of the “Role and Strategy” for each category was considered to assign the space in each store.
- Images and dimensions of the products were captured automatically to speed up the implementation of the Space Planning Module.
- Item Master has been improved by adding additional segmentations to products to enhance segment analysis.
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