In the era of Big Data dynamic pricing is now a reality.
However, there a couple of barriers in the way. The first is concerns about what consumers think about the practice, and, second, there’s the question of how to physically make a high number of price changes in-store – daily and even hourly. I’ll address both here.
Dynamic pricing gets a lot of a press. And although research into consumer attitudes is hard to come by, reports that online retailers change prices based on what devices shoppers are using, or, where they live, haven’t painted a positive picture. Indeed, in the online channel there’s the potential to use Big Data to tailor pricing by individual – and that could necessitate a privacy debate.
But in-store we’re talking about pricing by macro trends and generic sales data which is far less controversial, and in my opinion dynamic pricing is just a normal pricing strategy – on steroids. As shoppers we’re used to flash sales or big events such as Black Friday – all dynamic pricing does is use sales data in real-time to inform and increase the cadence of price changes. Dynamic pricing can be used to:
It’s no good having the data insight to change prices dynamically if there’s not enough staff available to physically change labels (or, labels are printed and shipped to stores on a weekly basis). Indeed, 46.7% of retailers currently update their prices once a week, whereas 53.4% want to be making changes daily or in real time. But Electronic Shelf Labels (ESLs) are now available that overcome these limitations. The labels allow a price or promotion to be changed anywhere on any label, anywhere, in seconds.
With vibrant colours and fully graphical displays the labels, that range in size, can display not only price and promos but a range of data including product origin, recipes, nutrition, environmental information, competitors’ prices, product reviews and many more. When linked to retailers’ ERP systems ESLs are, in my opinion, the final piece in the jigsaw for dynamic pricing to become a reality.
For more on how ESLs work, watch this animation.
3Survey of 2,200 US consumers by Bain & Company and ROI Consultancy Services
Our Electronic Shelf Labels (ESLs) bring the shelf-edge into the Internet of Things era, helping to create shopping experiences that are more engaging, rewarding and personalised – and profitable. We help retailers optimise sales and margin at the shelf-edge, where 90% of purchases are still made.
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