While the price optimization market has heated up in the past year with the emergence of new vendors (Revionics, KSS) and the going public of an established vendor (DemandTec), one of the pioneers of the technology, KhiMetrics, has reestablished itself under new ownership.
About a decade ago, KhiMetrics was among the first to introduce the concept of analyzing a retailer's sales history with sophisticated mathematical algorithms to rapidly determine the optimal retail prices that could be charged on thousands of products.
Between 2002 and 2006, KhiMetrics and DemandTec waged a “Hatfield and McCoy” battle for market share, said Scott Langdoc, vice president of research and business leader, Global Retail Insights, a division of IDC, Framingham, Mass.
About two years ago KhiMetrics was acquired by SAP, the giant software provider based in Walldorf, Germany. Since then SAP has had a much lower profile than KhiMetrics did in the price optimization market, but the company remains a significant presence, noted Langdoc.
“SAP's vision for price optimization is to allow retailers to implement it as a point solution,” said Christin Howell, director of product marketing, demand management applications, SAP. However, companies that employ SAP's multi-application enterprise resource planning (ERP) solution can also use price optimization “as part of the larger suite,” she added.
KhiMetrics sells price, promotion and markdown optimization tools to retailers as licensed software but also offers to host the applications. It also offers a simpler rules-based pricing system.
Since acquiring KhiMetrics, SAP has integrated its optimization technology into other demand-management applications, such as workforce management, replenishment and merchandise planning, for which “they deserve credit,” said Langdoc.
Howell said that original KhiMetrics customers such as Albertsons and 7-Eleven continue to use the application under SAP's auspices.