Survey: Retailers struggling with pricing strategies
- Only 35% of U.S. retailers believe they’ve implemented strategies to manage prices and promotions effectively across all channels, according to a new survey conducted by Retail Systems Research.
- Retailers are more concerned about competitive pricing than in years past, RSR found: Half of all survey respondents cited the possibility of negative customer reaction to pricing changes as the greatest organizational barrier to more effective pricing practices.
- Less than half of retailers believe their existing pricing strategies are driving customer loyalty, and only 23% are confident those strategies are successfully driving bottom line results, according to RSR.
Pricing and consumer perception present significant challenges for retailers of all shapes and sizes, RSR reports. 38% of merchants worry that customers don’t believe they’re sufficiently competitive on price, compared to 31% just a year ago.
Blame a lack of IT resources: 41% of retailers said IT deficiencies are the biggest obstacle hampering implementation of more effective pricing practices, followed closely by limited price, competitor and purchase data at 38%.
Many retailers plan to combat the problem by investing in new capabilities around promotion optimization, markdown planning and inventory management, RSR said.
“Back in 2012, we began expressing serious concerns about both strategies and tactics, but retailers seemed convinced they could win the race to the bottom on price or at least, by participating in the race, they could stay in the game,” said Paula Rosenblum, RSR Research co-founder and managing partner. “Fast-forward to 2016, and retailers are now starting to feel the negative impacts of their past pricing decisions. Consumers may be sensitive about price, but no retailer, not even the lowest-priced retailer, can win on price forever.”
Even the largest U.S. retailers are tweaking their pricing strategies. Amazon, which built its online commerce empire on cutthroat pricing, recently stopped refunding price drops on all products except televisions. Amazon traditionally offered refunds if the price of an item fell within seven days after purchase and the shopper notified customer service. An Amazon spokeswoman told Recode the policy was always limited to televisions, and that refunds granted on other products were "exceptions."
Meanwhile, Wal-Mart will end its ad-matching program at 500 stores on June 9. Wal-Mart previously allowed shoppers to secure a lower price at checkout if they presented a competitor’s ad selling an item for less. Moving forward, Wal-Mart will require customers to rely on its Savings Catcher app, which scans customer receipts and compares Wal-Mart prices to those advertised by competitors, offering an e-gift card for any differences.
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