Despite the wild success of e-commerce sites, brick-and-mortar stores are not going extinct. However, as more retailers begin to implement Pricing Intelligence strategies, we will start to see new ways to grab the attention of customers during their most impulsive moments. Here is a forecast of what the five-year plan looks like for Pricing Intelligence tools.
The immediate future holds the evolution of Dynamic Pricing – the lowering or raising of prices based on competitive threats in real time. We are already seeing a few retailers experimenting with digital price tags, and we expect to see this strategy grow over the next two years.
Smart Dynamic Pricing involves extracting consumer demand signals – valuable customer data from reviews as well as social media messages – and factoring them into pricing decisions for both personal offers and forecasting future purchasing trends. But mining customer data to create tempting personalized offers is only half the equation. Knowing when to make those offers – when the customer is most primed to make a purchase – is possible thanks to the GPS devices in their mobile phones.
Looking further out, through the next five years, we will start to see more retailers experimenting with iBeacons. A practice already underway known as geofencing, involves the texting of an alert to shoppers who come within a few hundred yards of a store’s perimeter. iBeacon technology brings this concept to the next level and gives retailers the ability to share customized messages about special deals and product information.
Rather than retailers casting a wide net to a large audience, in five years it will be more mainstream for retailers to reach their shoppers in a more targeted way while they are shopping and offer them special deals. The iBeacon uses geofencing and emits Bluetooth signals from specific shelves or promotional displays resulting in a new level of “micro-location” accuracy. For example, at Duane Reade stores, the iBeacon can woo shoppers with impulse purchase incentives – such as 25% off new nail polish colors or offering umbrella sales on a rainy day.
Pricing Intelligence is no longer about which retailer has the best price, but instead more about understanding your customer and knowing when they will be in the market to buy something. Using research data, retailers will have access to a variety of information to help them tailor specific deals for their target shopper. Retailers will know when a specific shopper last made a purchase, what they paid for it, and when they will need something new. Sometime within the next five years—or potentially even sooner—Pricing Intelligence will eventually evolve into Offer Intelligence, giving retailer’s better insights into when to offer promotions and who to offer them to.
Although the vast majority of retailers are not yet ready to implement advanced Pricing Intelligence tools, we will start to see more of these strategies roll out over the next five years – stay on the lookout!
Mihir Kittur is a Co-founder and Chief Innovation Officer at Ugam. He oversees sales, marketing and innovation and works with leading retailers and brands with insights and analytics solutions around their category decisions to improve business performance.