Black Friday is arguably the most important day of the year for retailers and 28% of consumers believe they can find the best deals on that day… but is it really true? And do you need to cut your prices, costing you valuable margin, in order to get them to your store or on your site? Is there a way you can make smarter price decisions and win more customers on Black Friday?
We analyzed the 360pi database and looked at 40 different products over the course of last year, and found that 68% of products were actually sold at a lower price before Black Friday. This represents a large opportunity for retailers, because it means they can achieve the higher sales volume on Black Friday without having to slash prices and decrease their margins.
Furthermore, it is valuable for retailers to know which products represented the 32% of products that were priced lower on Black Friday. These are the products that drive the customers through the doors. Having this type of information will allow retailers to optimize their pricing mix and achieve higher sales volume without unnecessarily losing margin.
The issue however, is that consumers are becoming increasingly price sensitive and prices have become almost completely transparent, therefore, it is becoming more difficult for retailers to win customers. To give you an idea, as of 2012, 50.4% of US consumers have smartphones, and that number is continually increasing. Over half of these consumers have admitted to abandoning a purchase because they found it cheaper elsewhere using their phone – right while standing in the store. This makes determining the best prices to optimize margin and increase sales volume on Black Friday an important challenge. Retailers need to know which products they should mark down and they can only know this by looking at the prices their competitors are setting. This may be easier said than done. With the number of products and competitors out there and the frequency with which prices are changing, collecting this pricing information can be daunting task.
The upside of this situation is that the information that is available to consumers is also available to retailers, even if it is hard to collect. This just means that while consumers are arming themselves with tools such as Comparison Shopping Engines and smartphone apps, retailers need to arm themselves with price intelligence to give them an upper hand when it comes to setting their prices. Knowing as much, if not more, about pricing than your customers and your competitors is key to setting prices that will not only attract consumers but will also preserve margins.
However, retailers will need to go beyond simply collecting pricing information… they also need to be able to leverage it. They need to be able to view it at the appropriate level of granularity in order to get actionable insights and real visibility into what their competitors are doing, and consequently, make smarter pricing decisions.
Therefore, although having price savvy and price sensitive consumers may seem like the start of the battle for the lowest price and the end of events like Black Friday, it doesn’t have to be. Using the tools that are now available, retailers can gain complete insight into their competitors prices like never before, and use it to win more customers this Black Friday.