The world of retail has taken considerable strides in recent times, specifically in the realm of technology and outreach. With the vast prevalence of online marketing, social media, and widespread accessibility due to the Internet, retailers today need to consider several factors to stay competitive and maintain consistent revenue streams. Today, three key trends cannot be ignored: dynamic pricing, agility in the market, and sustainable practices.
1. Pricing is Still a Key
While effective pricing in the past was more a matter of educated guessing, advanced technologies today are making it closer to a science. Before, systematizing a retailer’s pricing policy was often something done by consulting agencies, typically with a variety of manual analysis and brute force calculations. Today, the increase in available data coupled with algorithms capable of dissecting it has made the pricing game both less intensive and more effective. Accurately, artificial intelligence and machine learning are revamping the scope of competitive pricing entirely.
The traditional model was relatively static and was often dictated by a retailer’s overall strategy; if a company wanted to be known as a seller of premium products, their prices would, of course, reflect that. With the advanced dynamic pricing software available today, optimal pricing could mean changing your prices every day. Industry leader Amazon understood the importance of dynamic pricing back in 2013, even then changing their prices 2.5 million times every day on average.
The simple truth is, machine learning algorithms can identify patterns and implications of price changes both faster and more accurately than humans. A more detailed breakdown of dynamic pricing can be found in this article. In short, after amassing and organizing enough relevant data regarding aspects like essential products and competitors’ strategies, dynamic pricing solutions can build an effective revenue-driven pricing strategy. Of course, the complexity of the path towards AI-driven pricing models depends on a retailer’s maturity and goals. Regardless, dynamic pricing solutions have had a massive impact on the way retailers approach their competition and pricing strategy, while still increasing profits.
2. Market Agility
The boom in e-commerce has had an exciting impact on retail, as it offers buyers the convenience of home shopping. Understandably, a large portion of consumers does most of their shopping online, as the appliance is coupled with the ability to compare prices. Forrester Consulting concluded that over four-fifths of Americans reported comparing multiple prices before making an online purchase. It’s clear that online retail is not only potentially lucrative but also considerably competitive.
Indeed, more and more brick and mortar stores are moving onto omnichannel models in an attempt to increase engagement and create a seamless shopping experience. By giving consumers a variety of options, it allows retailers to attract a wider range of buyers. The disruption caused by e-commerce businesses in the retail sphere practically required physical stores to open up different shopping avenues.
The importance of agility and flexibility for retailers is shown by the increasing choices consumers have. In essence, you can shop in a physical store, order in-store pick up online, or order delivery right to your door. This versatility can transcend a few problems retailers had faced in the past, including limited locations, lack of convenience, or insufficient customer outreach. Also, omnichannel practices offer customers more flexibility in terms of stock availability.
Similarly, agility in marketing and fulfillment practices has taken a turn in recent years. Nowadays, consumers are more engaged in the purchasing and delivery process, most notably through text messages or emails. Whether it’s providing personalized updates on order or offering similar products the buyer might like, there is a growing need to build customer loyalty through convenient service and personalization.
In short, providing a seamless multi-faceted experience has become almost vital in the competitive nature of today’s retail market. As customers have more options and convenience than ever before, retailers need to take that into account when building a sustainable strategy. In many cases, this includes offering various options for pick-up and delivery, staying proactive in marketing and operations, and building loyalty through personalization.
Being sustainable and “green” is a growing concern among the population, and retailers, by and large, have recognized its importance. Not only does sustainability increase social value and generate good publicity for a retailer, but it can also be a great source of innovation for the industry as a whole. Finding environmentally-friendly solutions could benefit society in several ways, even if it increases costs to implement.
Indeed, appearing eco-friendly and sustainable brings a degree of reassurance to both employees and consumers. The opposite effect is often real, where society’s growing focus on environmental stability could impact a retailer negatively if it’s revealed that their processes are mostly unsustainable. Even back in 2007, an Ipsos survey found that 51% of consumers “totally agreed” that they changed the way they shopped to take into account social and environmental issues.
Interestingly, the same survey found that 65% agreed that suppliers should be paid a fair price even if it means a higher price for consumers. In essence, the number was slightly lower at 49% when it came down to retailers just focusing on price and value. It’s fair to assume that the number of environmentally-conscious buyers has risen since then and that now, more than ever, retailers and consumers alike are putting more value on sustainable practices and fair trade.
One noticeable change due to these new practices is the growing use of paper bags over plastic ones. Some retailers, like bookstores, are beginning to forego bags entirely to reduce their potential damage to the environment. In 2021 and probably onwards, the world of retail could continue to shift in favor of sustainable practices, whether in the form of eliminating plastic (such as the growing question of plastic straws), fair terms for suppliers, or any shifts in their processes towards more efficient and environmentally-conscious solutions. Companies see the value of being “green”, even if it means increasing their prices.