The pandemic has led to a swift and substantial transition to eCommerce, which in turn is creating a greater urgency for retailers to provide an omnichannel customer experience. But before diving directly into omnichannel, retailers should develop a strong multi-channel strategy to start, especially a multi-channel pricing strategy.
Every retailer interacts and engages with shoppers in multiple channels: In-store, eCommerce, marketplace, social media, Google checkout, email, mobile, mail (yes, mail is still relevant in a few areas). The customer generally has numerous touchpoints across these channels during their purchasing journey.
COVID has significantly impacted consumers purchasing behaviors, from what they shop, to where they shop and how they shop. Consumers are prioritizing convenience, safety and seamless shopping experience, and will even switch retailers for these needs.
Many retailers seek to provide to their shoppers with the best customer experience through a unified omnichannel strategy, but to do so, they need to invest in new technologies, build new capabilities and modernize their infrastructure. That is why a more logical first step is to have consistent, well-thought-out multi-channel strategies. This will provide the retailer with a strong foundation for later expanding into full omnichannel.
A solid multi-channel approach will require optimized strategies across several aspects of business, from marketing to payments to returns, and everything in between. When it comes to creating a strong multi-channel pricing strategy, these are some of the top things you need to consider.
It is essential for retailers to understand where consumers find value in each channel. For online, is value derived from quick delivery, free shipping, hassle-free checkout, ease of return, or having the lowest price in the market? With in-store shopping, the immediate access to purchase may be most important, as opposed to matching a competitor’s price.
In many cases, value drivers have changed for consumers in the current COVID situation. The seamless execution of BOPIS holds more influence than before over which retailer a customer will buy from. We also see that shoppers are limiting the number of trips they make to stores, but purchasing larger amounts and assortments, meaning retailers that have the most relevant assortment hold the advantage. Understanding what shoppers expect from each channel can help drive pricing strategies that will resonate with them.
Evaluating purchasing behaviors across different channels can provide insights for retailers on which categories and items are more price sensitive in different channels. To build multi-channel pricing strategies, you need to find out what key items drive shopper price perception, and how they react when a key item is promoted. These insights can inform retailers on how to create an effective pricing strategy across channels and the potential financial implications of an omnichannel pricing strategy.
Consumers react very differently to marketing media depending on which channel they are engaging with. Some promotions are much more effective for eCommerce compared to if it is offered in store, while the same will be true in reverse for other promotions. For example, financing offers may have a very different response in different channels. By measuring the effectiveness of promotions across channels, retailers can drive insights on investments needed and decide whether it is best to have consistent promotions across all channel or choose the most effective promotion strategy for each channel.
With consumer purchasing behavior and value drivers varying by channel, the question retailers need to ask is, should we have the same competitive price index across each channel? If so, what is the cost for maintaining that index? If not, it is imperative to understand the importance of price perception in a given channel, the right items to drive price perception in each channel, and the cost of maintaining an index price against a competitor to meet customer expectations.
Having a comprehensive multi-channel pricing strategy that resonates with the customer is the most important step towards the omnichannel journey, but it’s not the only thing. Other considerations for retailers are if the organization is ready for this change, and whether teams siloed within their channels or engaging with each other to maximize value for customers. Consider what changes may be required in your organization to drive customer-focused decision making.
As you determine the right multi-channel strategy, you will get a better understanding of the trade-offs of a full omnichannel strategy versus a hybrid approach across channels. From there you can plan your journey, its impact on customer expectations and ultimately the implications for financial goals.
Aditya Rastogi specializes in Retail Pricing Strategy and Advanced Analytics. He partners with retailers to define pricing strategies and integrating science-backed insights into the business processes. Aditya brings extensive experience in retail merchandising, promotional planning and process governance.