Optimized Pricing in Uncertain Times
RIS: How does having predictable pricing in an unpredictable market allow retailers to win?
Sullivan: The move from long lead times to real-time business demands, a shopping journey that has moved from a single touchpoint to multiple touchpoints, and a shopper whose preferences change on a dime with unpredictable behavior causes retailers to struggle to get pricing right. Today’s uncertain times will leave their mark on shoppers and no doubt change shoppers’ views around pricing, and not just in the short run. Those who rely on gut experience and spreadsheets for pricing and forecasting will cease to exist in the new normal. Without AI pricing, retailers can’t rapidly pick up market conditions and adjust pricing to offer optimal, non-arbitrary pricing that won’t alienate already non-loyal and price sensitive shoppers. Those retailers who have adopted AI-driven pricing will survive and thrive.
RIS: What key features should retailers consider when shopping for new pricing software and what’s the next big trend they should be aware of?
Sullivan: Retailers should ensure the software is capable of moving beyond simply adhering to business rules and basic analytics and into the world of prescriptive and science. It must be dynamic and able to recommend prices for both e-commerce and brick-and-mortar stores as well as understand the dynamics between them. Retailers should select vendors who have all the critical pieces to support the full lifecycle of pricing, from everyday pricing to complex promotional process and ultimately end-of-life pricing. The solution must be aware that trade funds are a critical component requiring support, collaboration and negotiation between retailers and their suppliers. Most importantly, retailers should look for highly reputable vendors who take a collaborative and partnering approach with their customers and are willing to earn their business every day.
Pricing will continue to grow more dynamic across the entire lifecycle. The pandemic is removing the training wheels from shoppers, forcing them to embrace the online world, driving e-commerce adoption at unprecedented rates and making dynamic, omnichannel pricing critical. While AI-pricing adoption has been growing worldwide, the pace will accelerate. Retail laggards who once felt it was a nice-to-have must realize it’s a must-have to survive in a future that will always be characterized by uncertainty.