Global Retail Consumer Research Puts Stake into 3 Myths of Consumer Retail Pricing
We just announced the findings – some of them which shake up some cherished assumptions – of a Revionics-commissioned survey conducted by Forrester Consultingi. It surveyed shoppers from the U.S., United Kingdom, France, Germany and Brazil to reveal their pricing expectations and tolerances – or what we termed “Retail Price Mythbusters, Shopper Edition”.
Here are three myths this research drives a stake into:
Myth 1: Shoppers are suspicious of pricing that uses data science. Wrong! One of the most interesting findings is that a whopping 78% of shoppers think it is fair to use data science to increase and decrease prices as long as they are presented with prices they’re willing to pay.
Myth 2: Shoppers accept dynamic pricing in limited sectors, like travel and leisure, but are resistant to it in other retail sectors. Wrong again! Taking the questioning a step further, shoppers revealed that they easily embrace dynamic pricing across a wide range of sectors. In the end only 6% saying they don’t think it is fair at all for prices to change dynamically.
Myth 3: Today’s active omnichannel shoppers demand consistency in prices between on-line and in-store. Again, another hallowed assumption turns out to be wrong. In fact, most shoppers do not expect consistent pricing between online and in-store channels, with customers generally expecting less expensive prices online than in stores. A notable exception is grocery, where shoppers expect less expensive pricing in the stores.
What does this mean for retailers?
The interesting correlary to shoppers perceiving science-based pricing as “fair” is that pricing based solely on the merchant’s judgment strikes them as arbitrary. Given the accelerating pace of price change frequencies and the rapid growth in a typical retailers’ assortment, particularly in on-line channels, this actually is logical. How can old manual processes reasonably keep up with an environment that moves at the speed of – well, the internet?
So what should retailers do? Those who haven’t already implemented a clear price optimization strategy leveraging science-based platforms had better get in motion. Those who dawdle will find that not only are they eclipsed by competitors who can offer more shopper-centric pricing while preserving margins long term to maintain a healthy business, but they also will fall further and further out of synch with the expectations of savvy, discerning shoppers.
Not surprisingly, now that we better understand shoppers’ true mindsets, we find also that they expect and demand contextually relevant promotions – again, leveraging science-based tools. As the research document states, “[Retailers] need powerful tools to devise the most attractive portfolio of pricing and promotion tactics to deliver a compelling proposition to each of their target markets.”
Want to learn more?
Read the full results for yourself! Click here for a complimentary copy of the research findings.
i Understanding Retail Customers’ Pricing Expectations and Tolerances, a May 2017 commissioned study conducted by Forrester Consulting on behalf of Revionics.