With the holiday season fast approaching, retailers everywhere are scrambling to finalize their pricing strategies for the next few months, according to a recent white paper by Retail TouchPoints. In this paper, Lauren Freedman of e-tailing group mentions keeping a close eye on competitive pricing situations as one of her four strategies for success this holiday season. So how are you monitoring your competitors’ prices? Are you spending lots of time with a manual process, or are you leveraging price intelligence to do it automatically?
This infographic highlights how price intelligent retailers (i.e. retailers using price intelligence solutions to monitor their competitors prices and product assortment) outperform their non-price intelligent peers. The information behind this infographic comes from research done by RSR Research, in a study that compared retailers using competitive price intelligence versus those who do not.
- 78% of Price intelligent retailers felt that they are able to respond effectively to their competitors’ price changes, compared to only 58% of the non-price intelligent retailers.
- 65% of the price intelligent retailers were able to resist unnecessary discounting versus only 50% of the non price intelligent retailers
- Of the Price Intelligent retailers, 67% were able to measure promotion performance effectively, compared to only 43% of their non-price intelligent peers.
As part of RSR’s research, they also revealed 5 retail pricing best practices, to help retailers avoid the race to the bottom, and win the price sensitive consumer:
- Take a broader view on price: Don’t just consider cost + markup when determining your prices, but also factor competitive pricing data, consumer demand, customer purchase history, demographics etc. into your pricing decision.
- Understand the channel impact on prices: First of all, don’t have different prices across the different sales channels. Make sure that your pricing strategy is cohesive across all your channels, and once you have achieved that, you can introduce channel specific promotions (NOT prices!). Also remember to consider channels such as mobile and social (pinterest is becoming a great online advertising/sales tool).
- Set a reasonable number of pricing changes per week: The last thing you want to do is confuse and frustrate your customers – so don’t change your prices too often. By using price intelligence you can keep a closer eye on your competitors’ prices and make fewer, but smarter, changes.
- Don’t price match – change the game. Providing equal value rather than an equal price helps retailers avoid the race to the bottom. Remember that customers calculate value by factoring in the item, the price, availability, customer service etc.
- Understand the impact of price decisions and changes: It is critically important that you measure the performance of your price decisions and changes, and then combine this information with your price intelligence and other competitive information to make smarter pricing decisions.
To learn more about these retail pricing best practices, download the new RSR Research Whitepaper on ‘Retail Pricing Best Practices: Top 5 Tactics of Price-Intelligent Retailers’ or register for our webinar ‘5 Ways to Win the Price Sensitive Consumer’.