Tough Love: An In-Depth Look at Retail Pricing Practices
Retailers continue to escalate the number of price changes they send to stores and other channels. Their field human resource infrastructure groans under the sheer weight of the work effort involved in keeping signage and tags up to date, but pressured by perceived consumer price sensitivity and increased competitive pressures, these price changes continue. This escalation continues despite a dearth of information about the potential impact of changes to price and even an analysis of the actual impact of tactical price changes.
- While a majority of retailers continue to increase the number price changes they send to stores and other channels, those who underperform in year over year sales are leading the charge, with fully 90% reporting at least some increase over the past three years. Sadly, only 15% report aggregate gross margin improvements for the critical holiday season.
- It appears as though retailers have learned to live with “showrooming” and price transparency. They are less worried this year about damage to their zone pricing policies (21% this year vs. 34% last year), and a plurality (38%) believe their policies to manage prices across channels are effective. They've seen and survived showrooming, and with a few high profile exceptions, have opted to “be competitive” rather than price match (38% vs. 17%).
- The top technologies currently being evaluated include markdown forecasting and planning (24%), promotion optimization (23%), regular price optimization (20%), inventory management/availability as a price driver (23%), and price intelligence (18%). A significant number are exploring or budgeting for these same technologies.
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