For retailers, top pricing pressures involve keeping up with the competition and reducing markdowns to remain profitable. More niche—but also important—are issues around dynamic pricing, the practice of lowering or raising prices on the fly.
According to an April 2018 survey by Forrester Consulting and Revionics, a majority of consumers worldwide (62%) are OK with fluctuating prices, as long as the price seems fair and wasn't arrived at in an arbitrary way.
Dynamic pricing is common practice online, but found less frequently in stores. Not all retailers have the means to implement electronic shelf displays. In a November 2017 survey of retailers worldwide by Planet Retail, 40% were either currently using electronic shelf labels (ESLs) to show prices, promotions and detailed product info, or planned to use them in the next 12 months.
Some 78% of retailers would like to implement more price changes and promotions to provide better prices and deals in-store, Planet Retail found, but 65% don’t feel able to execute all of the pricing changes and promotions they'd like to. Concerns about consumer acceptance have been a hindrance, in addition to technological issues.
In the study, customers said being able to buy sale items for the advertised price is the leading experience that would make them return to a store. This would seem fundamental, and most retailers (68%) recognize inaccurate pricing and promotions—in-store or across channels—are one of the biggest reasons they lose customers in-store.
Other experiences that would make respondents return were receiving personalized promotions (26%) and a good deal on a product close to the expiration date (25%).
The latter is one key to consumer acceptance of in-store dynamic pricing. When Planet Retail asked consumers about reasons they'd be accepting of prices being lowered throughout the day, No.1 was a product reaching its sell-by date (65%), followed by a surplus of stock (54%), matching a competing offer (52%) and adjustments to match online prices (42%). Only 10% wouldn’t accept any reason.
However, consumers weren’t asked about prices being increased, which would also be likely to happen. There is a delicate balance to pricing, as evidenced by the 44% of digital buyers in the Forrester Consulting study who said they would return an item if they found a lower price within an hour.