Olena Saraniuk: Hello and welcome to the #Pricing_Heroes podcast by Competera. This is a series of interviews with the best-in-class retail pricing experts who drive their company's bottom line metrics and the retail industry as a whole. Our guest today is Johan Karlsson, a pricing analyst at one of Sweden's biggest home retailers, Clas Ohlson. Hello Johan, and I'm really happy to have you here today.
Johan Karlsson: Hello, Olena. I'm very happy and pleased to be here with you.
OS: First of all, could you tell the listeners more about yourself?
JK: I'm a pricing analyst at Clas Ohlson, one of Sweden's biggest home retail companies operating in three different markets. A little bit about my background: I've been active in the pricing world for almost two years now, so I'm quite new to this area. However, pricing has always been a big interest of mine because my parents used to run a gas station in my hometown when I was a kid. That's where my interest in pricing started. I remember my father going around in the car and noting down the prices of competitors, using a very old-school approach to pricing. I became really interested in pricing back then, as my father tried to match or even beat his competitors' prices to attract customers to his gas station.
OS: Sounds like a legacy approach to competitive data crawling.
JK: Yes, it was a very old-school fashion, and I also remember wondering why our prices for items like soda, dust, and groceries were more expensive compared to the stores down the street. I asked my father about it, and he explained that people who visit a gas station and buy a drink don't really care about the price. They're usually on their way to or from work and just need something quick, so they don't even look at the price. That's when I realized the significance of pricing and its impact on customer behavior.
OS: Definitely, it's one of those factors that influence pricing and repricing. We've been having a lot of conversations with retailers about the factors they consider while setting prices. You mentioned the gas station, and we recently had an interesting case about a gas station taking weather conditions into account as a pricing factor. So, you're absolutely right about the various factors that can influence customer sentiment and buying decisions.
JK: Yes, that was an early learning experience for me, and now that I've been working with prices, it has become even clearer. My father used to have slightly higher prices compared to grocery stores.
OS: But now you can help him with the pricing strategy. That's great!
JK: Yes, for sure. I would be a good help.
OS: So, you basically answered my first question about what inspired you to pursue this career. Typically, not many specialists go straight into pricing. They usually develop their careers in other areas like e-commerce or different spheres. However, you are an example of someone who went straight into the field.
JK: Yes, you often hear from pricing colleagues that they got into pricing either by coincidence or because no one else was there to do the job, so they ended up handling the pricing strategy for their company. But I think I'm part of a generation where pricing analysis has become more of a recognized profession from the start. It's not just something you stumble upon.
OS: Uh-huh. Definitely. Basically, we just returned from a conference in Sweden where we introduced our solution. So, we made some adjustments to the pricing, which garnered a lot of surprised reactions from attendees. It's evident that fairness is still lacking in the retail market. Although people are beginning to discuss it, I believe there is still insufficient awareness. Nowadays, AI has taken over many mundane tasks previously done by humans, allowing people to make more thoughtful decisions.
JK: Yeah, I agree. Implementing an AI solution provides more room for analyzing and optimizing pricing strategies instead of manual work and calculations involving big data sets. I completely agree with you on that. Additionally, I've been thinking about how an AI solution can assist in weather forecasting to factor that into pricing decisions. For example, certain weather conditions influence customer behavior in the retail industry. When it's sunny, more customers tend to go out and shop, while rainy weather may lead to increased demand for umbrellas. Considering weather as a pricing factor opens up numerous possibilities and adds an interesting aspect to the process.
OS: Definitely. I discussed this topic in a previous podcast episode with one of your colleagues. If you haven't listened to it yet, I encourage you to do so. We also touched upon the rising demand for smart homes in Nordic countries, which could also be connected to weather conditions. Speaking of factors, my next question is about the most important ones you consider when setting prices for products. Apart from competitor prices and customer behavior, are there any other factors you take into account?
JK: Yes, the customers' willingness to pay is the most crucial factor to consider when determining prices. However, it's challenging to measure since there are various factors to account for. Competitive prices also play a significant role, especially in the retail market we operate in. Our competitors sell many of the same products as us, so it's crucial to remain competitive in terms of pricing. We also consider vendor costs and production expenses.
OS: Government regulations can also influence pricing, and having good relationships with vendors can be advantageous. Setting the right price is a subtle art, and it's essential to raise awareness about it. Many people don't fully understand the significance behind the price tags they see in stores every day. Shifting focus to your career, what advice would you give to individuals who are considering a career in pricing, starting right from university?
JK: That's an excellent question, and I appreciate it. My top advice for newcomers in the pricing field is to learn the importance of effective communication with other departments in the company. Retail companies often have established ways of working, and understanding those methods is crucial for effectively conveying your message to the rest of the organization. Communication skills are vital when starting a career in pricing because you may face opposition to your ideas in the beginning.
OS: I completely agree with you. Communication skills are indeed essential, and your fresh perspective as someone currently navigating this career path is a significant advantage. When I started my career in communications, I also sought out someone who was going through a similar experience. Soft skills are highly relevant in this field, and I wholeheartedly agree with you.
Now, let's move on to the last question. Can you recommend any literature, media, podcasts, or social media profiles related to pricing and retail that you personally consume and would suggest to your colleagues?
JK: Absolutely! Besides this fantastic podcast, "The Pricing Heroes," there's another pricing podcast that I find interesting called "The Impact Pricing Podcast" hosted by Mark Stiving. It emphasizes the importance of value-based pricing.
OS: Definitely, and I can relate to both input pricing being one of my favorites as well. I want to give a shout out and kudos to Mark for doing what he does. I'll definitely tag him in the podcast. Alright, I think I'm out of questions. Thank you for this super insightful and fresh conversation. Thank you for being with me today.
JK: Thank you very much, Olena. I appreciate it. Thank you for having me. I'm very happy to be here.
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