When it comes to setting prices, it’s Amazon vs the rest of the world… or is it?

Posted by admin on Apr 14, 2015 11:04:27 AM

Price has always been a fiercely fought battleground between retailers, but the intensity of this competition has soared in recent years. The reason for this? Amazon.  
iStock_000039540318Medium   For retail stores in particular, Amazon’s constantly fluctuating prices are the stuff of nightmares. While changes can be made online in a matter of seconds, it can take some retailers hours, days or even weeks – to update paper price labels across their store network. With this discrepancy, how are they supposed to remain consistent with digital channels, let alone competitive?   We conducted some research recently for our Rethinking Retail report: Getting the In-Store Price Right in a Digital Age which revealed that 68% of UK shoppers and 72% of US shoppers have been deterred from purchasing an item in a store because they believed the price to be too high.  


So how do retailers with a store presence tackle the ‘price isn’t right’ perception?   Technology, is the simple answer; implementing the digitally responsive tools that enable stores to react faster to price changes online.   Retailers using
Electronic shelf labels (ESLs) have the capacity to update prices in near-real time, at a fraction of the operational cost and inconvenience. Their fully graphic capabilities also enable retailers to display greater volumes of information – including competitor prices, to demonstrate that shoppers are receiving value for money.  


Even Amazon isn’t immune from this challenge… In an interesting new development, Amazon has now actually opened a pickup and drop-off store on the campus of Purdue University in West Lafayette, Indiana with more to follow. There are obvious advantages to establishing a store presence: increased brand awareness and giving consumers the opportunity to see, touch and try items, for example. The latter will allow Amazon to push sales of its own brand hardware, such as Fire tablets, which haven’t taken off online. So from a showroom perspective, it makes complete sense.   However, could Amazon’s frequent price change strategy damage bricks and mortar conversions? After all, there would be nothing to stop customers looking up prices at the shelf edge, finding it cheaper through Amazon’s online marketplace and ordering the item for delivery to that same store – essentially undercutting its own prices.   We’ll be keeping a watchful eye on how they cope with pricing challenges that many well-established bricks and mortar retailers are still struggling to master.  

Martin Smethurst SVP, Global Sales and Marketing Displaydata

Topics: amazon, electronic shelf label, in-store, retail, shelf edge, Blog, digital channel, digital price label, price change