RTP Editors Share Takeaways From Price And Promotions Special Report
Last week, Retail TouchPoints published Price and Promotion Wars: How To Avoid A Race To The Bottom, illustrating retailers’ need to:
- Combine product recommendations and promotions
to build basket sizes;
- Use AI and dynamic pricing to hasten
decision-making and improve promotion structure; and
- Sharpen seasonal demand forecasts.
The RTP team shares their top takeaways from the report, including standout statistics and recommendations.
Debbie Hauss, Editor-in-Chief: I am particularly drawn to the term “emotional pricing,” as referenced by Adheer Behulkar, an A.T. Kearney analyst. He talks about the use of behavioral science tools in order to use all factors motivating an individual shopper to make a purchase, such as the time of day and the stage the consumer is in the purchase process. This takes the guessing game out of the process of pricing and promotion. By integrating AI/machine learning algorithms into the process, pricing and promotion decisions no longer have to be completely 100% manual. I don’t advocate for 100% AI-controlled pricing and promotions; I believe it should be a strong balance of human perception and machine intervention.
Adam Blair, Executive Editor: Researching and writing the Price and Promotion Optimization Report, it occurred to me that I should have included a third “P,” for Personalization. That’s hardly a surprise — personalization is increasingly critical to pretty much every customer-facing aspect of retailing. What I’ve learned in many years of reporting on this topic is that personalized pricing shouldn’t mean that I pay $25 for the same item that someone else pays $50 for. That’s how the airlines work, and no one should be emulating their pricing structure. What personalized pricing should mean is that retailers that are able to present items to a consumer at the time and place when he or she is ready to buy will face much less price resistance than those that can’t. I was heartened to hear from experts in the field that most retailers already have the data and tools they need to make this happen — they just have to develop a greater willingness to use them.
Glenn Taylor, Senior Editor: I know consumers always love a good price, but I couldn’t help but be caught off guard with the sheer amount of patience many customers display in anticipation of a price dip. As many as 53% of shoppers will wait as long as it takes for an item they want to drop to a price, according to Forrester Research. If I’m seeking out a good price and it’s not there, I’m going elsewhere, so that was a surprise. When this is tied into the idea that retailers likely have the data necessary to optimize pricing, I would hope that more retailers would study just how far the “dip” goes, and understand their own floor price. With a single system in place to track historical pricing trends and sales at each price, retailers should be better positioned to determine when and how a less generous promotion will draw in shoppers.
Bryan Wassel, Associate Editor: One trend I’m seeing hit every aspect of retail, and it’s certainly reflected in the Price and Promotion Optimization Report, is the growing science of prediction. Retailers have access to an ocean’s worth of data, and by properly cataloging and sifting through the data points they can actually design a pretty clear map of the future. It’s not perfect, of course, but whether predicting demand to schedule promotions or combing through historic traffic data to properly staff stores during the holidays, modern retailers have no excuse to be taken by surprise when shifts in day-to-day operations occur. The pieces are right there. All retailers have to do is fit them together, and then they can provide what customers want, before the shoppers even know they want it.