New findings from Forrester reveal common misconceptions retailers make when it comes to pricing.
When Revionics commissioned Forrester Consulting to conduct a recent study looking at retailer-shopper disconnects (and points of agreement) , there was some excited speculation on what would be uncovered through its findings, but boy did we underestimate to the implications and reality of how little retailers truly understand their shoppers. This infographic does a great job highlighting these findings, and might I add, it’s quite a fun read with its interactive nature. But if you’re even shorter on time, here are my top 3 takeaways.
#1 PRICE MATCHING
So many retailers (76% in fact) partake in this type of promotional marketing where if we don’t have the lowest price, we’ll match it! Seems great, but what’s really happening here? The reality is just 17% of shoppers demand price matching. This means 83% of your customers are at risk! Why? If they don’t see the competitive price they want the first time, they may take their business elsewhere. Customers do not want the extra burden of having to research and then prolong the checkout process or even have to see customer service in some cases. Lesson to be learned, don’t risk it, stop price matching!
#2 LOWEST PRICE
Just as price matching is not resonating with customers, you also don’t have to be the lowest price on every product, all the time. 76% of retailers feel that shoppers are mainly looking for the lowest price. This is scary when the reality is just 17% of shoppers report that they only buy at the lowest price. This misconception leads to margin erosion practices and the ill-fated race to the bottom. This leads me into my last point… Retailers need to get smarter with their pricing practices.
#3 GET SMART
Shoppers are looking for different items, at different times, through different channels. Although price is the #1 factor for people when deciding when to shopii, it’s not the only one. In order for retailers to remain competitive, but also watching their bottom-line, they need help in determining the optimal prices that will balance the proverbial scales. Retailers need AI pricing and they know it. 76% of retailers believe AI pricing would have a positive impact on their shoppers.i And the kicker… shoppers want it too. 78% of shoppers trust AI pricing to help provide them with a fair price.ii
iRetail Success Requires Personalized, AI-Driven Pricing Strategies, a Revionics-commissioned study conducted by Forrester Consulting, October 2018.
iiUnderstanding Retail Customers’ Pricing Expectations and Tolerances, a Forrester Consulting study commissioned by Revionics, June 2017