Oracle Life Cycle Pricing

INFORMATION DRIVEN Maximize Sales and Margins with Price Optimization Oracle Retail Lifecycle Pricing Solutions

Leverage the Power of a Holistic, ScienceBased Pricing Strategy

In the retail industry, the “moment of truth” comes down to the right product, in the right place, at the right price. For pricing in particular, dramatic industry changes have led to a complex environment that demands a more-dynamic and precise strategy. Price is typically the fastest and strongest lever to affect a quick sales turnaround, and to price your products effectively, you must make rapid decisions based on customer demand at the store level. However, timely, effective pricing decisions can be difficult with thousands of items in hundreds of stores located around the world, each with varying consumer preferences. Oracle Retail’s solutions are based on best practices and use retail science and analytics to help you make optimized, insight-driven, item- and store-level decisions at every point in the retail process, including pricing for all stages of the product lifecycle. Oracle solutions leverage one enterprisewide forecast that factors in all key demand drivers and communicates them to systems across your organization. This integration provides you with a thorough understanding of forecasted demand, so you can meet your customers’ needs and improve profitability in the face of growth. Oracle Retail lifecycle pricing solutions help you efficiently execute all types of pricing: everyday, promotional, and markdown. These solutions offer the benefits of forecasting science and robust optimization specifically designed to meet the requirements of each key retail vertical, such as short-life fashion merchandise or long-life hardlines and grocery merchandise. And the embedded price optimization analytics deliver better overall planning, so you can balance your prices with downstream supply chain activities through to execution in-store, helping to avoid costly overstocks and understocks. Oracle Retail’s comprehensive, endto-end lifecycle pricing solutions deliver maximum value at a low total cost of ownership—so your customers can count on you to have the merchandise they want, on hand, and at the right price.

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Fact: Retailers running Oracle are 48 percent more profitable than their peers. (Source: Oracle Performance Advantage Research Report, April 2008, Mainstay Partners.)

Enhance Your Pricing Processes to Boost Profits

Why Use Lifecycle Pricing? Recent trends have had major implications for pricing strategies, increasing the need for moresophisticated pricing systems. •

Geographic and demographic diversity has created the need for a variety of flexible price-elasticity curves for individual products and localized pricing strategies.

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Falling trade barriers let you source products globally to reduce costs, but this can lengthen lead times significantly. The effect of pricing strategies on demand must be analyzed to ensure adequate stock.

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In the current economic climate, value-format retailers dominate the industry. With efficient supply chains and huge buying power, they have compressed prices across categories. To protect margins, you must actively manage prices.

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Many customers shop largely on price and convenience, so you must deploy pricing strategies that maximize margins for differentiated

Oracle Retail offers pricing solutions that enable more-profitable pricing decisions throughout an item’s lifecycle: from maximizing the profitability of everyday pricing, to driving the highest-value promotions, to ensuring maximum profit while clearing end-of-life inventory. These solutions help you quantify item-level demand—taking into account factors such as seasonality and elasticity, cannibalization and halo effects, and competitor pricing activities. You can then use this demand information to analyze possible pricing scenarios and select the best one based on overall goals and business constraints. These solutions also deliver robust “what-if” analysis capabilities and forecasting analytics, allowing you to evaluate the impact and trade-offs of decisions prior to price approval and execution in stores. True lifecycle pricing involves more than simply enabling appropriate pricing throughout an item’s lifecycle. Unfortunately, most organizations are encumbered by processes and systems for pricing and promotions that are disjointed and fragmented. This challenge prevents critical insights from being shared, resulting in item-level price decisions that are misaligned with overall category goals, promotions that cause out-of-stocks because demand is not understood throughout the supply chain, and prices that are not actionable due to lack of integration with your execution system. Oracle Retail’s solution to these challenges uses a common demand forecast to connect pricing to other critical areas of the business, such as assortment planning, supply chain management, and in-store execution. Oracle Retail delivers the industry’s most comprehensive suite of pricing, planning, supply chain, and in-store execution solutions. These best-of-breed applications provide retail-specific decision support to drive moreprofitable everyday merchandising decisions. Oracle’s unique approach lets you achieve maximum value by embedding price optimization into overall category management and balancing pricing throughout downstream supply chain activities to execution in-store. With Oracle Retail solutions, you can develop efficient, demand-driven operations that deliver the financial rewards of industry leadership.

products, while employing loss-

Lifecycle Pricing Designed for Your Merchandise Mix

leader and parity pricing strategies

Because the goals and processes of pricing can vary depending on the type of merchandise mix, Oracle Retail offers lifecycle pricing solutions designed to address the unique requirements of each key retail vertical. Moreover, Oracle’s solutions offer a modular approach, driving low total cost of ownership and ensuring alignment with investment priorities.

where and when beneficial.

If you are a retailer with seasonal or short-life merchandise, such as fashion and apparel, you typically have a goal of clearing inventory while maximizing profitability. 2

“Oracle Retail Price Optimization will provide insight into consumer demand for styles and trends, which helps us create pricing that shoppers consider a value. Our customers expect fresh, trend-right product in our stores, and the system will help us deliver on that promise.” John Dembinski, Vice President Merchandise Planning and Allocation, Famous Footwear

Oracle Retail delivers robust science and analytics in an end-to-end lifecycle pricing approach, so you can quickly react to changes in demand for items with little or no item history and short, rapid demand peaks—increasing inventory turns and driving gross margin dollar growth. This approach includes the following solutions: •

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Align Pricing Decisions with Category Management Goals When pricing processes are not integrated with category planning processes, you cannot translate

Item and assortment planning: Defines assortment strategies and buy quantities by store/cluster to create item lifecycle plans and then manages the items in-season

your overall strategies into itemlevel prices that drive toward your category goals. Oracle Retail’s

Promotion planning and optimization: Translates strategies from category management or item/assortment planning into identification of the highest-value promotions with the best advertising space allocation, while understanding item and market-basket impact within a robust “what-if” framework Markdown optimization: Translates strategies from item/assortment planning into optimized markdown pricing that will clear inventory while maximizing profitability Retail price management: Checks business rules and reconciles conflicts before sending prices to stores for execution

approach to lifecycle pricing is based on solutions that can be integrated to enable an insightdriven enterprise, so you can •

merchandise-planning processes and supply chain activities •

tional decisions and pricing

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Oracle Retail Regular Price Optimization: Translates strategies from category management into the optimal price at every stage of the product lifecycle, factoring in halo and cannibalization effects, cross-elasticity, margin goals, competition, and case-specific business rules

Reduce over- and under-stocking by understanding how price changes

Retailers with long-life, replenished merchandise such as hardlines and grocery retailers typically use a pricing-strategy process based on driving maximum performance throughout an item’s lifecycle. Oracle Retail delivers an end-to-end lifecycle pricing solution that focuses on maximizing overall financial goals throughout the lifecycle, including applications in these areas: Oracle Retail Category Management: Defines category and item strategies and goals, rationalizes assortment, and optimizes space to achieve overall financial targets

Understand demand and its effect on shelf space, SKUs, and promo-

Retail demand forecasting: Leverages item demand changes to drive one common forecast across the entire enterprise •

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Communicate price across all

demand for an item and halo items, and then communicating these demand changes throughout all supply chain activities •

Gain maximum value from lifecycle pricing solution investments by integrating price optimization with in-store execution for pricing decisions that are actionable

Oracle Retail Promotion Planning and Optimization: Translates strategies from category management or item/assortment planning into identification of the highest-value promotions with the best advertising space allocation while understanding item and marketbasket impact within a robust “what-if” framework 3

“We challenged Oracle Retail to provide us with solutions and technology across our entire retail footprint within an integrated framework. In the end, there was no one else in the market close to delivering the broad range of solutions that Oracle could for our business. They made it an easy decision for us to partner with them.” Kristen Blum, Chief Information Officer, Abercrombie & Fitch

Oracle Is No. 1 in Retail

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With the help of Oracle Retail you can keep pace with your customers and transform the economics of

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your business. •

Only Oracle provides end-to-end technology solutions—database,

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Oracle Retail Markdown Optimization: Translates strategies from category management into optimized markdown pricing to clear end-of-life inventory while maximizing profitability Oracle Retail Price Management: Checks business rules and reconciles conflicts before sending prices to stores for execution Oracle Retail Demand Forecasting: Leverages item demand changes to drive one common forecast across the entire enterprise

middleware, and applications, all based on open standards—to transform your retail business. •

The Oracle Retail Advantage—Insight-Driven Retailing

Oracle Retail is the result of Oracle’s strategic acquisition of best-of-breed applications, as well as the realization of its long-term vision for the retail sector. These applications provide retailers in key vertical segments—including fashion, grocery, and hardlines— with more insight, increased integration, and greater value to drive customer relationships.

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Oracle Retail’s advanced analytic capabilities transform your ability to make decisions, so you’ll carry the right items all the time.

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Only Oracle offers analytic capabilities that are fully integrated between merchandising and financial systems.

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Oracle Retail’s lifecycle pricing solutions are “smart,” which means they enable better pricing and promotion decisions because they are based on retail science in the critical areas of forecasting and optimization. By incorporating retail science into your decision-making processes, you can validate more-subjective business instincts with an impartial, informed foundation for the myriad of pricing decisions you face. Moreover, retail science makes it possible for you to automate the more-mundane, quantitative aspects of decision-making. Finally, pricing processes supported by fact-based, scientific analysis increase your employees’ productivity and allow pricing at lower organizational levels than was previously possible. The results are smarter decisions that focus on customer demand, which ultimately improves sales and gross margin through optimal lifecycle pricing. Oracle Retail customers have gained significant benefits by deploying lifecycle pricing solutions, including a 5 to 15 percent improvement in gross margin dollars, a 10 to 15 percent improvement in sales dollars, and a 10 to 15 percent increase in inventory turnover. Results such as these have helped Oracle become the No. 1 provider of innovative and comprehensive software solutions for retailers—delivering insight into daily business decisions so you can serve your customers better and gain more-profitable results.

Oracle Retail applications begin and end with value—so you can start

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