Retailers must thoroughly evaluate the effectiveness of pricing and markdowns. Many year-end sales and promotions are about to kick off, and under the Fair Trading Act, retailers are required to provide customers with accurate information and transparency around discounts and promotions.
On November 17, 2021, the Commerce Commission of New Zealand issued a statement reminding retailers to keep it real this holiday season. The instruction was clear: to take care that the discounts they offer provide genuine savings off the usual selling price. The Commission also advised against the tactic of increasing prices right before a promotion and immediately claiming a bigger discount to grab a shopper’s attention.
Being transparent with pricing leads to happy customers, and customer sentiment will be a key contributing factor to retailers’ success in Q4 and early 2022. With this in mind, here are a few considerations for retailers in Australia and New Zealand, along with my perspective on how Revionics can assist retailers in providing accurate, customer-delighting pricing.
There are real consequences for pricing strategies that could be perceived as misleading or inaccurate. Some retailers have not only been taken to court but also fined for such actions. As an example, in October 2020, Pak’nSave Mangere was fined $78,000 for discrepancies between the advertised price of goods on its shelves and those charged at the checkout.
Retailers must make sure that promotions are not only accurate and in line with regulatory guidelines, but also that they are optimised for meeting business objectives. The holiday season is a crucial time of year for any retailer, and retailers must be able to set correct prices and discounts.
However, there is a very short timeframe for businesses to evaluate which promotions are working and which aren’t, and then take necessary corrective action. I see this as especially important in New Zealand’s grocery industry, which is one of the most promotionally driven grocery markets in the world.
With COVID restrictions lessening, retailers are hoping for big sales and revenue gains through Christmas and the end of the year. But that optimism can’t translate to pricing and promotions that deteriorate customer trust, nor should it cloud any judgment related to the evaluation of promotional performance.
When there are discrepancies from the promotional price seen at the shelf versus what rings up at checkout, consumers understandably lose trust in a brand. Perhaps less obvious (but just as important), promotions that consumers perceive as not as good a deal as advertised also deteriorate customer trust. Holidays or not, building consumer trust is essential for any retailer, and shoppers will choose to shop at brands they can rely on for accurate prices and solid promotions.
For one of the busiest shopping periods of the year, retailers should forecast outcomes and tailor their strategy to offer the most efficient promotions for supporting specific goals and targets. Based on customer data that provides a clear picture of consumer behaviour in response to pricing, Revionics helps retailers hit those revenue goals and profit margins without eroding customer trust.
Customers want to feel they are receiving good value for their money. An AI pricing solution can not only help retailers understand their customers’ pricing preferences on a more granular level, but also provide the optimal prices for supporting both consumer needs and desired business outcomes.
Through Revionics’ rules and constraints capabilities, retailers can set up rules to ensure pricing strategies meet all current regulatory requirements while they also set base prices and optimise promotional activity. Revionics’ software is built for change, dynamically adjusting to market and consumer updates based on channels and locations.
A key piece of Revionics’ price recommendations is the science, but strategy is also essential. To avoid potentially facing promotional price discrepancies, businesses must learn to set prices “optimally” in the first place using base price optimisation. Retailers shouldn’t have to rely on manual processes to ensure that the price is set correctly. Revionics automates that process.
Retailers must be able to craft distinct markdown plans for all clearance types optimised for inventory and consumer behavior across all channels. Optimising promotions brings value to retailers and consumers. Making sure that those promotions are accurate all the way to checkout is essential for consumer loyalty.
Revionics helps retailers focus on getting prices right and ensuring customers walk away with a sense of confidence that they have not been “played”. Additionally, our solutions provide a hedge against giving away margin when it is not needed. Our pricing experts will walk alongside you to help promote the right items at the right times and use the right vehicles – not misleading promotions – to get people into the store and help you reach your financial objectives. Reach out to learn more.