A retailer's pricing strategy is a battleground they compete on every day. As a retailer, you must use the latest technologies and methods to stay competitive in the pricing war. Most retailers have not yet taken advantage of the benefits that come from data-driven price optimization and electronic shelf labels (ESLs).
Today, when the retail market is characterized by digital disruption, rivalry, and price-aware shoppers, choosing the appropriate tools to implement dynamic pricing is more vital than ever.
What retail pricing looks like?
The modern consumer is picky. They are erratic, fickle, and well-informed. Shopping is no longer something they do occasionally; they shop all the time. What goods cost, where to go, and how to get the most for their money are the questions customers have.
Now that COVID has given consumers more time to pursue all of these activities, consumers have more free time available to them.
Consumers of today are modern, complex, and dynamic, and their needs cannot be met by systems designed for a different era. In the current economic environment, buying and merchandising teams that depend on spreadsheets and disconnected pricing strategies are losing market share and missing out on margin opportunities.
Consequently, having access to the right technology to support your business decisions is essential - technology that empowers you to communicate with your customers more effectively and efficiently.
Pricing is a critical aspect of maximizing profits while respecting customer expectations, and dynamic price optimization tools can assist retailers with leveraging market, competitor, and demand signals in real-time to set prices that meet shifting consumer demands, allowing them to maximise profits while meeting customer expectations of their brand and products.
Pricing assumptions among consumers
Because of concerns about how customers may respond, retailers often have reluctance about making regular pricing adjustments. Current consumers, on the other hand, are more accepting of dynamically shifting prices than you might assume.
It is, after all, not a radical concept. Other businesses, such as airline tickets or rental vehicles, hotel booking, etc constantly modify their costs based on seasonality, events, and even the day of the week. Amazon, Flipkart, Big Basket etc which has set the standard for retail and e-commerce buying experiences in many ways, adjust millions of prices every day. In short, consumers have grown accustomed to it.
A customer's perception of fairness is more important than the actual price. As long as consumers feel the pricing is transparent and non-bassed, they will perceive it to be so. In fact, what is considered to be fair to them varies by channel, region, consumer base, and other factors, so determining those fair prices is easier said than done.
Dynamic pricing is becoming more popular with consumers, but it is important that Retailers comprehend exactly how to implement this new pricing strategy to make it profitable and relevant to their customers.
Dynamic pricing targeted towards consumers
It's not just a matter of altering prices more frequently. It involves creating pricing selections based on real-time analysis of consumer signals. Moreover, you should do so according to your organization's overall strategy and current processes.
It is at this point that data-driven price optimization can be used, not only to analyze but also to predict customer demand. The retail industry utilizes pricing as a means of both delivering and generating value.
The use of Electronic Shelf Labels (ESL) for price optimization
Obtaining real-time pricing insights still requires retailers to take action. The benefits of dynamic pricing are limited by the frequency with which price adjustments may be implemented. Electronic shelf labels are a great way to achieve that.
Even without dynamic pricing, printing and updating price tags is a laborious and time-consuming process, so electronic shelf labels can significantly reduce labour costs. But when AI pricing optimization is added, the advantages are greater still.
With ESLs, retailers are able to remove the limit on how many price changes they can make, which results in a higher ROI and more profit possibilities - up to 30% more profit returns, according to our research. There is no doubt that retailers who do not have this fully automated dynamic pricing capability are losing out on a substantial portion of their profits.
Let’s Wrap up
There is no disputing that the retail industry is evolving. Retailers who take advantage of last year's turmoil by investing in a better future will thrive.
Retailers can prepare more for today and better position themselves for tomorrow by using technology that aids automation and decision making, such as AI-based price optimization and smart shelf labels.