The Next Frontier For Retail Pricing
Username: Name: Membership: Unknown Status: Unknown Private: FALSE
In this age of 24×7 digital shopping, consumers place more importance on price than perhaps any other value attribute. In our latest bit of research, retailers – in a constant battle to fend off price leaders like Amazon and Walmart – tell us that they know full well that even though offering a low price may not win new customers, having high prices will certainly cost them existing ones.
As a result, pricing is more important than ever for both sides of the retail transaction. We surveyed qualified retailers to find out how they are coping. The following are some of our key findings:
- In the Business Challenges section of the report, we find some stark differences in retailers’ attitudes about what – and who – is driving pricing issues in the first place. While average and under-performers complain about the aggressiveness of the competition (60% call it their number one issue), the top concern for the majority of those with the best sales performance (what RSR calls Retail Winners) is that consumers continue to ratchet up their focus on price. This affects their entire strategy around what to do next.
- Retail Winners are far more satisfied in their companies’ current capabilities than average and under-performers are. Even though they only give themselves a barely passing grade (64% say they are pleased with their ability to establish a price strategy for regular and promotional products), that number is abysmal for average and underperformers – 36%. We dig into this data in the Opportunities section of the full report.
- Customers have been through a lot in the past few years. Lockdowns, social isolation, difficulty finding products due to supply chain woes: all have a cumulative effect. Rising prices have them on edge, and retailers are incredibly sensitive to this fact. As a result, when asked to identify the biggest Organizational Inhibitors to adopting new pricing tools, a space normally relegated to gripes of internal matters (lack of human resources, interdepartmental miscommunication, etc.), it is an outside factor that bubbles to the top for the first time ever. Nearly 1 in 3 retailers (29%) is fearful that any change in prices could bring about a negative reaction from customers. This is unheard of.
- As it relates to Technology Enablers, AI has been the talk of the industry for years. But where are retailers’ perceptions amidst all the hype? Turns out they see a lot more value from the promise of AI than we ever could have predicted. More than half of average and lagging retailers deem it vital (the remainder call it a nice-to-have feature), but more importantly, nearly all the best-performing retailers in our study say that is essential to drive business improvements going forward (82%).
As with all of our research, based on the data we uncovered throughout the project, we also offer several in-depth and pragmatic suggestions on how retailers should proceed. These recommendations can be found in the Bootstrap Recommendations portion of the full report, which we invite everyone to read here. Like all of our research, it is completely free to all.