Study: The price may not be right for retailers
Retailers are not feeling confident that their pricing strategies are satisfying consumers.
A new report on pricing conducted by RSR Research and sponsored by retail consulting and analytics firm Precima, “Pricing 2016: Life Becomes Unmanageable,” reveals retailers are worrying that consumers do not believe they are priced competitively enough.
For example, only 35% of U.S. retailers believe their company has a strategy in place to manage prices and promotions effectively across all channels, while 50% believe increased price sensitivity of consumers is a business challenge. Another 48% believe the largest challenge is pricing aggressiveness from competitors.
Forty-one percent of retailers cite not enough IT resources available as being a barrier to implementing effective pricing practices, followed closely by lack of price, competitor, and purchase data at 38%. And while personalized pricing is the goal for many retailers, 41% of respondents feel that internal challenges indicate nothing drastic is likely to occur near-term due to concerns over negative consumer reactions.
“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, partner at RSR. “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.”
Other notable findings include:
• Less than half of retailers feel their company pricing strategies are building customer loyalty and only 23% feel the pricing strategies are effective at driving bottom line results.
• Retailers are looking to replace early competitive price intelligence solutions and plan to invest in new capabilities around promotion optimization, markdown planning, and inventory management.