Pricing has long played a significant role in a retailer’s success, but with the industry continuing to undergo an omnichannel transformation the decisions retailers make about pricing will separate winners from losers.
Why is that? Omnichannel success is all about delivering a seamless customer experience and understandably much emphasis has been placed on supply chain efficiencies and the integration of physical and digital. Overlooked to a large degree has been the role of pricing, but this situation has quickly changed as retailers have awoken to the reality that an improper pricing strategy can undermine what might be an otherwise well executed omnichannel plan.
In today’s price transparent world, pricing forms the cornerstone of omnichannel success. The channel mix is changing rapidly, with 65% of shoppers researching online and purchasing offline (ROBO), and 40% of customers purchasing online after seeing the product in-store, according to Cisco Internet Business Solutions Group. Shoppers live in an omnichannel world – even if retailers aren’t there yet.
Today’s shoppers know instantly when a retailer is under-priced and when a retailer is over-priced. Retailers who don’t have the same visibility are asking for trouble. For example, a retailer lacking pricing visibility is likely failing to convert on some products, and giving away precious margin on others. Not only that, but an inconsistent pricing strategy fails to reinforce a retailer’s brand image and associated value proposition, jeopardizing hard-earned customer loyalty in the process. These issues highlight the importance of having trusted competitive price intelligence across channels.
Let’s start with a look at in-store. In the “old days” (read pre-Internet), shoppers had to drive from store to store to compare prices. Then came the web and e-commerce, mobile devices with always-on access to comparison prices, and a severe economic downturn that seems to have permanently instilled a deal-seeking mentality in shoppers. Today, retailers need new tools to compete in this price transparent environment and win customer trust and loyalty. That’s what we do at 360pi, and in our work with some leading companies we have uncovered five keys to achieving effective omnichannel pricing. They include:
- Benchmark your pricing relative to your competitive set. And, not just a national average, retailers need to understand regional markets with zone-based pricing opportunities and threats.
- Start with the online price perspective. The majority of shoppers already use online pricing as their primary reference point. Online competitive price intelligence delivers exponentially more complete information, more frequently and with significantly better quality, than in-store competitive pricing and flyers, and should be the baseline to which other data sources can be appended as necessary.
- Match your competencies to address the dynamic pricing threat within your competitive set. Once you understand which competitors are changing what prices and when (i.e. time of week, time of day), take steps to compete effectively. In an online channel, it is a relatively straightforward process to pre-empt competitors with a well-conceived pricing strategy based on accurate price intelligence. For ‘brick and mortars’, dynamic pricing is more challenging, so look for ways to bridge this gap by implementing an Electronic Shelf Labeling (ESL) solution and/or loyalty programs such as Walmart’s Savings Catcher, which offers offline shoppers the guarantee of the best online prices through targeted rebates.
- Put your collective best foot forward. Omnichannel is about creating and delivering a consistent customer experience, and this means sharing competitive pricing intelligence across your organization. While many retailers have implemented a price intelligence solution for their merchandising teams, few have delivered this same insight to their customer facing staff including store associates and call center agents.
- Lastly, the ability to integrate in-store with online price intelligence is key to creating a consistent customer experience. This does not mean offering the same price across all channels, but rather delivering the same offer to the same customer across all channels. To bring these two worlds together, integrate your in-store and online competitive intelligence into a single view that will help your team make optimal decisions in the omnichannel.
Pricing is one of many elements new age retailers must master to give shoppers the omnichannel experience they increasingly demand. As organizations look to execute a broad range of omnichannel initiatives, it has become apparent that those distancing themselves from the pack have realized pricing is the catalyst that holds the entire omnichannel strategy together.
Alexander Rink is CEO of 360pi, a leading pricing intelligence firm. 360pi delivers price intelligence throughout the retail organization including merchandisers, marketers, in-store associates and call center agents to drive smarter decision-making. Visit www.360pi.com.