According to a recent study conducted by Forrester Consulting on behalf of Revionics, consumers believe that science-based pricing technology is fair and that items priced by a merchant’s judgment is arbitrary and unfair. Overall, successful pricing requires both established strategy and vast amounts of data.
Some surprising facts out of the study, Understanding Retail Consumers’ Pricing Expectations and Tolerances, include that only 17% of those surveyed responded to price matching, while a whopping 78% agree with the use of data science to determine prices.
In addition, digital promotions are not necessarily reaching consumers. In fact, 29% of those surveyed will not respond to mobile promotions, and 36% will not respond to online promotions, however, 34% will seek out in-store promotions. In fact, in-store promotion expectations are particularly high, with that number jumping to 44% in the United States, 32% in Brazil and France, and 27% in the United Kingdom.
Most consumers do not expect online and offline prices of products to match, with most assuming online will usually be less expensive—except for when it comes to groceries.
“The research points to the critical importance of science-based pricing technology in meeting customers’ expectations. It also highlights the role of technology in delivering contextually relevant promotions and the importance of applied technology in selecting the right portfolio of price and promotion tactics,” stated the report.
Also, the report confirms that retailers need primary research and self-learning models to help them keep up with customer expectations. For example, only 9% of those customers surveyed will pay for a product at full price and only 5% will accept the first price they see. As many as 81% shop around for the best price.
“The research results send a loud and clear message to retailers: if you haven’t already implemented a clear pricing strategy leveraging science-based platforms, you need to act now," Cheryl Sullivan, Revionics chief marketing and strategy officer told FierceRetail. "The future of retail will depend on science. Today’s super-savvy shoppers are very sensitive to pricing, and they trust science more than retailers to set prices that are relevant and fair. It’s not a nice-to-have anymore. Retailers need to embrace science to protect and grow their market share and stop their margin leakage. Those who choose to go it alone will be driven out of business.”