This post is part of our new Future of Retail series which interviews the leading founders and executives who are on the front lines of the industry to get a better understanding of what problems the industry is facing, what trends are taking place, and what the future looks like.
The following is an interview we recently had with Ken Ouimet, CEO and founder of Engage3.
1. What’s the history of Engage3? Where and how did you begin?
KO: My brother and I grew up in the industry working for our parents’ company, Comparative Prices International. We collected in-store retail data for their corporate clients. In the late 1990’s, we founded Khimetrics and pioneered retail price optimization as a new software category. It revolutionized retail pricing and routinely delivered 1% of sales to profit for our clients including Albertsons, Safeway and Lowes. In 2006, we sold Khimetrics to SAP. Then we started to notice a big change in how food and household consumables were bought and sold.
In 2008, we formed Engage3. We made it our mission to develop technology, processes, and networks to make online and store-level item prices visible to all market participants — engaging retailers, manufacturing companies and consumers — hence, the name Engage3.
As in 2 other years before, this year we were recognized again as one of the top 1,500 fastest-growing firms by Inc. Magazine’s Inc. 5,000 List.
2. What specific problem does Engage3 solve? How do you solve it?
KO: The retail industry is going through a massive transformation driven by higher expectations from consumers and a changing landscape for retailers. Consumers expect transparency and want to know that they are getting the best deal. Retailers are struggling to adapt to price transparency and empowered consumers. Traditional Hi-Lo and Everyday Low Pricing models like Walmart’s are becoming ineffective.
According to International Data Corporation’s (IDC) Retail Insights, the use of product intelligence clouds by retailers and consumers will influence $3.7 trillion of retail spending by 2020 in the U.S. alone. As early as 2015, IDC has recognized Engage3 as an early mover in this emerging participatory commerce world.
Engage3’s solutions combine data science, deep domain expertise, and innovative technology to provide competitive intelligence and consumer science to the retail industry. Our omni-channel competitive intelligence SaaS platform, MissionControl™, improves competitive visibility and maximizes retailers’ ROI. MissionControl™ is powered by advanced predictive analytics and Engage3’s historical product and pricing database, which consists of over 7 million UPCs and 10 billion price updates per year across over 50,000 retail locations.
Our optimization platforms leverage the combination of digital assistants, consumer intent, our market intelligence cloud, and real-time auctioning system to deliver personalized 1:1 messaging and offers directly to consumers.
3. What’s the future of retail?
Prediction #1: Product attributes will be the shelf space of digital sales. Consumers are less and less loyal to brands, expecting more value for their hard-earned dollar. They will base their purchases on the attributes of products (size, is it organic, non-GMO, etc.). The rise of private label brands (Kirkland Signature from Costco, 365 Everyday Value from Whole Foods, Trader Joe’s store brands) already shows this trend.
Prediction #2: Pricing will become transparent and dynamic. The internet-in-your-pocket phenomenon has led to consumers shopping for the best prices, without having to set foot in any physical store. Vendors will need to calibrate their deals based on the slightest shifts in supply and demand to remain competitive.
Prediction #3: Pricing will become personalized. With digital records of every retail transaction, savvy vendors will personalize the buying experience for each customer, attempting to bring value whenever they can.
4. What are the top 3 technology trends you’re seeing in retail?
Trend #1: The rise of Digital Assistants. Digital Assistants will be ubiquitous and will be used in a large percentage of purchase transactions. A study by the Institute of Grocery Distribution (IGD) has found that four in ten shoppers would be interested in being alerted to offers on their phone while in-store. In our homes, the adoption of smart-home controls like Google’s Home and Amazon’s Alexa will only increase our dependence on readily-available online information that these appliances provide.
Trend #2: The best retailers are learning to transition from being omni-channel to providing a unified experience across channels that is consumer-centric. The consumer expects not only to see the same pricing, but also have the same shopping experience whether she buys in-store or online.
Trend #3: The use of algorithms in retail pricing. This will be a huge shift in the industry. Prices will be adjusted using algorithms based on a customer’s buying habits, changing supply and demand, competitors’ changing prices, inventory levels, and time of year.
5. Why is the retail industry ripe for disruption?
KO: The industry is ripe for disruption because of the shift of power to the consumer. The future of retail is consumer-centric retailing. Now more than ever, customers expect convenience, personalization, and value. The rise of the mobile device has created a huge opportunity for retailers and brands positioned to meet these expectations. It’s becoming difficult to show and get credit for meaningful differentiation so these businesses are incentivized to take advantage and be the first movers on technology that allows them to capitalize on these shifting consumer preferences.
About Ken Ouimet
Ken Ouimet is the CEO and Founder of Engage3 and is credited with creating the retail revenue management and price optimization market. His first company, Khimetrics, led the industry for almost a decade before being successfully acquired by SAP in 2006. Engage3 is once again pioneering the next big thing in retail business models in the era. Ken literally grew up in the business starting as a 7 year-old auditing in-store prices while working for his parent’s business, Comparative Prices International. Ken earned a BS in Chemical Engineering from UC Davis and went on to UC Santa Barbara to pursue his PhD work in Chemical Engineering and Theoretical Physics. While studying Statistical Physics he realized he could utilize these same principles to model retail markets and optimize retail pricing decisions. With his unique perspective and insight, Ken applied statistical physics to create an entirely new approach. Ken served on the Board of Directors of Revionics between 2007-2011 and as Chief Scientist & VP of Innovations at SAP AG between 2006-2007.