www.demandtec.com

A DemAnDTeC CusTomer suCCess sTory

CompAny snApshoT

n Revenue $4.3 Billion

n Industry Segment Grocery

n Geography 147 supermarkets in Pennsylvania, Maryland, Virginia, and West Virginia under the Giant Food Stores, Martin’s Food Markets, and Food Source banners

CusTomer overview

ChallengeGiant needed more flexibility in its ability to execute pricing and promotion strategies, and it needed to keep pace with a flood of cost and competitive changes in a fast-moving market.

solution DemandTec Lifecycle Price Optimization™ and DemandTec End-to-End Promotion Management™

Key Benefitsn Pricing team productivity more

than doubledn Specific pricing actions are better

aligned with corporate pricing strategy

n Results of pricing rule changes and promotions are accurately forecasted before new prices hit the shelves

n Streamlined deal management process improved efficiency and reduced errors

n Benefits can be rolled into lower consumer prices – further improving competitiveness

Giant Increases Efficiency and Effectiveness in Pricing, Promotion, and Deal ManagementGiant Food Stores, LLC, a division of Ahold USA, traditionally had a narrow, but consistent Every Day Low Price (EDLP) strategy that it applied across most products. The company’s 30 year old, labor intensive pricing and promotion systems could no longer keep pace with the sheer number of pricing decisions in a rapidly changing market, and these systems limited the company’s ability to execute more sophisticated pricing strategies. Company executives recognized that a new solution would boost efficiency and help the company stay ahead of its competition.

Because they support 30 different price zones covering 147 stores, the pricing team potentially faced 30 different variations of every decision it made. Adding complexity to this scenario was the growing amount of competitive data Giant collected and the degree of cost-volatility in the market, which made those decisions even more daunting and overwhelming.

According to John Lerch, Director of Retail Pricing at Giant, “It wouldn’t be unusual to execute 40,000 to 100,000 pricing decisions in the course of a week’s time. This was a daunting task using their legacy manual systems, which required a human decision for every SKU in every price zone.”

Giant was interested in more consistently executing its pricing strategy based on a definitive set of rules. It kept many of the rules on paper, others were only managed in people’s heads, and some weren’t documented well enough to help ensure sustainability over time. The company also had no means to reliably forecast the impact of rules changes on its business before prices hit the shelves.

In addition to the pricing challenges, promotion planning and forecasting were being performed manually – a very time-intensive, cumbersome activity for Giant merchants. Vendor deal management added similar burdens, as the paper-intensive and error-prone processes consumed resources.

“I had a very significant backlog of pricing projects,” says Lerch. His team recognized that with its restrictive legacy tools, it had no chance of completing routine pricing execution work, much less pursuing higher-level goals. “Unless we were to nearly double our staff, we would not have been able to catch up with that.”

Embarking on a Path of Innovation with DemandTec Solutions for Pricing and Promotion ManagementAs Giant surveyed the market for a solution, DemandTec stood out as the company that could truly partner with them to meet their current and future needs. Scalability was one driver in their decision. DemandTec had proven that its solutions could handle massive amounts of point-of-sale and competitive data, it could easily handle the large numbers of price changes Giant faced, and it could do so without the need to increase staffing levels.

Giant Food Stores Prices the Entire Store with DemandTec

CusTomer suCCess sTory

www.demandtec.com

DemandTec, Inc.1 Circle Star Way, Suite 200 n San Carlos, CA 94070tel 650.226.4600 n fax 650.556.1190

Copyright © 2008, DemandTec, Inc. All rights reserved. Printed in the USA. DemandTec and the DemandTec logo are registered trademarks of DemandTec, Inc. DemandTec Lifecycle Price Optimization, DemandTec TradePoint Network, DemandTec End-to-End Promotion Management and the DemandTec Platform are trademarks of DemandTec, Inc. All other trademarks mentioned in this document are the property of their respective owners.

09/08

“DemandTec benefits our

company because it makes

us more efficient, so that

we can remain a low cost

operator. Being a lower cost

operator allows us to be more

aggressive at the shelf as far

as price and promotions are

concerned, which is better for

our customers.”

“With DemandTec, we can

select the best way to

structure a vendor deal to

maximize the benefit in terms

of sales, margin, and volume

performance so that the

vendor is satisfied, the retailer

is satisfied, and ultimately the

customer is satisfied.”

John LerchDirector of Retail Pricing

Giant Food Stores, LLC

The company also responded favorably to the solutions’ ease of use, particularly the way it allowed merchants to codify pricing rules using simple, straightforward sentences rather than relying on technicians to interact with the system. The clincher was DemandTec solutions’ forecasting capabilities, which allowed merchants to predict the impact of pricing changes and new promotions and to make changes before prices hit the shelves. Giant chose to implement DemandTec Lifecycle Price Optimization™ for the entire store, including perishables.

Streamlined Pricing Processes Bring Greater Agility and Improved Sales Performance“Since implementing DemandTec solutions, Giant has seen significantly enhanced productivity and efficiency,” Lerch says. The company is now able to respond to all vendor cost changes and competitive actions on a weekly basis, instead of having to react to them as resources became available. That in itself has made Giant more agile. Gains so far have been accomplished without increasing staff, effectively boosting productivity to at least twice what the team had previously managed. DemandTec’s solutions have also made it easier to take advantage of more margin enhancement opportunities, and staying in close compliance with Giant’s pricing strategies has resulted in a measurable sales benefit.

By automating the pricing process, DemandTec solutions have removed the burden of repetitive pricing minutiae and freed the pricing team to work more strategically. The move has also reduced the need to constantly reprioritize projects to ensure that they can be completed. The focus now is on continually tuning Giant’s strategy to maintain profitability while satisfying its customers and maintaining its price image.

More Profitable Promotions with Greater EfficiencyGiant chose to implement the complete DemandTec End-to-End Promotion Management™ solution, including the Deal Management software service, to help the company streamline its trade funds presentation, negotiation, and reconciliation process. Today, 98% of Giant’s vendor deals are negotiated via the Deal Management service on the DemandTec TradePoint Network™. According to Lerch, “With DemandTec, we can evaluate a number of different alternatives for a promotion to maximize the benefit in terms of sales, margin, and volume performance so that the vendor is satisfied, the retailer is satisfied, and ultimately the customer is satisfied. We can ensure much more reliable execution, utilize fewer resources against that promotion, and end up with a better promotion in the first place.”

Lerch concludes, “DemandTec benefits our company because it makes us more efficient, so that we can remain a low cost operator. Being a lower cost operator allows us to be more aggressive at the shelf as far as price and promotions are concerned, which is better for our customers.”

Learn More About DemandTec For more information on how your company can work with DemandTec, call 888.676.3626 or visit www.demandtec.com.