Zone pricing gives retailers the power to tailor price strategies into ‘zones’ rather than geographic boundaries.
Do your zones reflect the impact of COVID–19?
COVID–19 has impacted consumer behavior, especially when it comes to pricing. No one can accurately predict how and when consumers will return to stores or how their buying behavior has been altered. We do know that post-COVID buying behavior will be different than during or before COVID. We also know consumer behavior will be very different by city, state, and region as restrictions are lifted.
Savvy retailers are monitoring consumer behavior to understand demand by geographic zones. They use their data to create tailored zones that support prices, promotions, and markdowns based on real-time consumer behavior. They tune zones by creating unique zone structures for each – price, promotions, and markdowns – reflecting regional differences and consumer behavior.
Zone Pricing for COVID-19 Review
Most retailers leverage the necessary zones structures. They may have state-based zones because of liquor or tobacco regulations. Others may have a few zones where they have a national zone with individual zones for large metropolitan cities like New York City and San Francisco, where they charge more.
Promotions and markdowns also require zone sensitivity. Some retailers leverage zones for markdowns based on weather patterns, for example, they manage prices for jackets differently in Florida than Minnesota.
Few retailers embrace the ability to tune zones to create multiple, overlapping zones that optimize, price, promotions, and markdowns to optimize results across the entire lifecycle of a product.
Zone Pricing Based on Science
Retailers have all the data they need to review how demand has changed at the local level to pinpoint consumer trends and buying behavior. Scientific models tailored for retail are the most efficient and accurate method to sift through terabytes of retailer data.
The right tools enable the pricing team to establish zones and manage the complexity of multi-layered zone structures. The best retailers are leveraging a combination of advanced analytics and business strategy to create the most effective pricing zones which leverage both demand patterns and strategic initiatives.
One of the strategic initiatives that is most important to consider when building a zone structure is competitive impact. Creating a zone pricing structure that takes into account key competitors while also leveraging industry-leading analytics enables retailers to not only track the evolving demand of their customers, but also gives them the power to win the price perception war vs. their top competitors.
Advanced pricing platforms now allow retailers to dynamically execute their competitive strategies across numerous zones while maximizing profit potential on non-competitive items.
Build a Zone Pricing Structure Tailored for Today and Ready for Tomorrow
There is no better time for retailers to reset and build a pricing structure based on a well-designed zone-pricing strategy that increases price competitiveness where it matters the most. Having the right price, the right promotions and the right markdowns in the right locations will help retailers drive positive results and gain share in these uncertain times. Unsure of how to start restructuring your zone pricing for COVID-19? Revionics can help.