The emerging trends in the pricing consulting services industry include dynamic in-store pricing and increased investment in price optimization technology. More details on each trend, including examples, can be found below.
1. Dynamic In-store Pricing for Retail
- Dynamic pricing is typical for online stores but is less prevalent on the shelves of brick and mortar stores. Research from Displaydata and Planet Retail RNG shows that 65% of retailers are unable to make the amount of in-store pricing changes they want due to the manual process of pricing and labeling.
- Still, 78% of retailers want to be able to make in-store pricing changes.
- Retailers are likely to move towards dynamic in-store pricing in the coming years, because there’s a business case for it, according to Robert Evan Sanders, a professor of marketing at the University of California.
- Customers are also tolerant of real-time pricing changes, with 65% of them welcoming a price change within the day if a product is approaching its sell-by date. This does not match with retailers’ expectations, with a quarter of them believing that customers would not accept frequent price changes.
- Allowing prices to change throughout the day for perishable items can also help reduce a retailer’s waste.
- In one example, retail software company Revionics has been helping Bed Bath & Beyond, a domestic merchandise retailer, test in-store pricing via electronic shelf labels. However, this has not been fully implemented because of the challenges of integrating electronic shelf labels with older point-of-sale systems.
- More modern systems, such as Amazon’s digital price tags in its physical stores, allow store staff to easily update the pricing information on products. As well, these digital price tags allow customers to see product ratings and give Prime members special discounts.
2. Investment in Price Optimization Technology
- Consultants from Deloitte state that robotic automation and machine learning technology are among the trends that will disrupt price optimization. They recommend that companies that aren’t using these technologies yet can create early-stage projects by selecting which part of their pricing strategy to optimize first.
- According to Open Pricer, which provides cloud-based pricing solutions, companies investing in price optimization technology bring in higher-value customers and outperform competitors. Clients can be presented with quotes customized in real-time.
- In the logistics industry, which predominantly operates on fixed pricing, pricing technology platforms that optimize pricing by season, day of the week, and time band, can help optimize vehicle utilization. This will lead to fewer vehicles on the road and less congestion.
- There is a strong business case to be made for investing in price optimization technology. The average payback of price optimization software solutions is at around 12 months. Businesses get a 3.2% average revenue lift as a result of price optimization projects. But the fees can be steep with businesses spending $500,000 to 700,000 per year on the technology, not counting set up costs.
- In one example, Blue Ridge Global, a supply chain planning solutions provider, acquired Prolific Virtue, which develops price optimization technology. The acquisition allows Blue Ridge customers to improve their revenue through competitive analysis, price sensitivity analysis, and pricing simulations.
- The InterContinental Hotels Group invested in a guest reservation system which includes price optimization technology to create “more sophisticated yield management and pricing optimization.” They will also test attribute pricing on the system, which will allow guests to choose accommodations based on relevant attributes.