1. A DemAnDTeC CusTomer suCCess sTory
The Price is Right at H-E-B
with Consumer Demand
Management from DemandTec
Promoting Old-Fashioned Values In a Modern, Competitive
Retail Marketplace
CusTomer overview Key to H-E-B’s success is its reputation for consistently low pricing. Over the last few
years, H-E-B’s pricing came under increased pressure when giant discount retailers
Challenge
entered its markets. To help offset this competition, H-E-B partnered with DemandTec in
To thwart the advances of giant
order to provide the merchandising team with a powerful set of pricing tools.
discount retailers, leading grocery
store chain H-E-B needed a more Reacting to a more complex competitive pricing environment proved to be a challenge
strategic pricing system to support for H-E-B’s legacy pricing applications. H-E-B’s existing pricing system, a library of
its evolving business strategy spreadsheets, made it difficult to define competitive pricing strategies and quickly execute
accurate prices across hundreds of stores and tens of thousands of products. While
solution
H-E-B was working on its next set of prices, competitors would preempt those moves
A comprehensive Consumer
with yet another set of price changes. “Pricing data is highly perishable,” explains Mark
Demand Management (CDM)
Bradshaw, Director of Strategic Pricing, H-E-B. “With our previous spreadsheet system,
enterprise software solution from
we could react to information, but sometimes not until after our competitors had changed
DemandTec
their pricing strategies.” In addition, H-E-B’s legacy systems were unable to model and
Key Benefits forecast consumer demand, or provide insight into strategic considerations such as the
Ability to simulate and predict optimum price differential between its private label products and leading national brands.
complex pricing strategies prior to Nor could the legacy systems systematically track pricing inconsistencies such as if a
implementation, achieve business particular smaller-sized item was a better deal than the larger size of the same product.
rules compliance, meet financial As a result, prices started to fall out of alignment with H-E-B’s overall merchandising
objectives, and continually strategy.
enhance customer satisfaction
Keeping Competitors at Bay With a Next-Generation Pricing System
and price reputation
Retailers can gain a huge advantage over their competition with an ability to accurately
forecast and shape consumer demand. To maintain its competitive position – and protect
its long-standing price reputation with its customers – H-E-B needed a pricing solution that
would enable it to precisely forecast demand, consistently enforce complex pricing rules,
and support its dual objectives of delivering great value for its customers while achieving
CompAny snApshoT
its business objectives for market share and financial performance. To meet these
n Revenue challenges, H-E-B turned to DemandTec. “H-E-B evaluated several software vendors and
$14.2 Billion chose DemandTec because of the features and functions provided by the DemandTec
n Market Sector Lifecycle Pricing solution,” says Scott McClelland, Division President, H-E-B. “DemandTec
Grocery differentiates itself from competitors by providing scaleable software and sophisticated
science that enable our merchants to develop superior merchandising strategies.”
n Geography
Adds McClelland, “We’ve partnered with DemandTec for over three years now, and are
Over 300 supermarkets in the
extremely pleased with the quality of the results that our teams have delivered to the
Southwest U.S. and Mexico
business.”
www.demandtec.com

2. CusTomer suCCess sTory
Capitalizing On a Complementary Relationship and Proven Technology
Keeping in mind the primary goals of enforcing H-E-B’s pricing rules and aligning prices
with the competitive strategy of each category, DemandTec’s software platform analyzed
two years of point-of-sale (POS) data to provide H-E-B with a detailed forecast about “With the simulation
how each of the company’s pricing rules would impact consumer demand and financial capabilities of the DemandTec
performance of every item in every store. The solution also analyzed every possible
solution, we were able
combination of rules, items, zones, and time periods, enabling H-E-B to run virtually
unlimited “what if” scenarios to simulate various competitive strategies and the resulting to predict how we could
impact on the business. simultaneously increase
This ability to simulate complex pricing strategies and assess their impact on volume and our gross margin dollars
financial performance prior to execution is critical in helping H-E-B make more informed, and achieve our desired
accurate decisions. Bradshaw explains, “To try to improve our price performance against competitive position –
the competition in a particular product category, we determined that using our previous
which amounted to a major
manual spreadsheet method would have meant a considerable financial investment on
H-E-B’s part. But with the simulation capabilities of DemandTec solution, we were able to improvement in our business.”
predict how we could simultaneously increase our gross margin dollars and achieve our Mark Bradshaw
desired competitive position – which amounted to a major improvement in our business.” Director of Strategic Pricing
H.E. Butt Grocery Company
Additional Benefits for H-E-B
H-E-B is also using the predictive capabilities of DemandTec software to help its
procurement department lower the total cost of goods. “When one of our suppliers “DemandTec differentiates
informed us of a cost increase on a key product, we were able to use the software to
itself from competitors
simulate various pass thru scenarios and determine the best way to reflect the cost
by providing scaleable
increase on the shelf,” says Bradshaw. “Also, by using the software and working with the
suppliers ahead of a cost increase, our business development managers were able to software and sophisticated
better negotiate cost terms. This saved H-E-B a significant amount of money, while also science that enable our
maintaining volume goals for the vendor. This amounts to a win-win-win situation – the merchants to develop superior
consumer, the supplier, and H-E-B all benefit.”
merchandising strategies.
With its sophisticated modeling and forecasting capability, and dynamic rules management We’ve partnered with
functionality, DemandTec’s software allows H-E-B to effectively and profitably compete
DemandTec for over three
with larger discount retailers without matching prices item for item – something that
H-E-B was unable to do before implementing DemandTec software. To extend these years now, and are extremely
capabilities into other merchandising processes, H-E-B is currently evaluating pleased with the quality of the
DemandTec’s promotion and markdown applications. According to Bradshaw, “I see results that our teams have
significant opportunities in using a common platform to predict and improve our promotion
delivered to the business.”
and markdown pricing strategies. This approach will enable H-E-B to manage the entire
pricing lifecycle from one integrated system.” Bradshaw explains, “We are also looking to Scott McClelland
Division President
DemandTec to help us evaluate market-basket data, assess key value items in a category,
H.E. Butt Grocery Company
and determine optimal zoning strategies. With this level of understanding around
consumer demand, we can write merchandising strategies to make better business
decisions.”
Learn More About DemandTec
For more information on how you can partner with DemandTec, call 1.650.645.7100 or
visit www.demandtec.com.
DemandTec, Inc.
One Franklin Parkway, Building 910 n San Mateo, CA 94403
tel 650.645.7100
Copyright © 2011, DemandTec, Inc. All rights reserved. Printed in the USA. DemandTec and the DemandTec logo are registered trademarks of DemandTec, Inc. www.demandtec.com
All other trademarks mentioned in this document are the property of their respective owners.
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