Survey: Winning retailers differ from peers in pricing strategy
Top-performing retailers stand out in how they look at and respond to pricing challenges.
According to a new study from Retail Systems Research and DemandTec by Acoustic, “Retail Pricing 2022: Bringing Agility and Precision to the Art of Pricing,” there are notable differences in how retail winners (retailers with better than average sales growth of 4.5%) approach pricing and how average performing retailers and retail laggards (retailers with worse than average sales growth) respond to pricing challenges.
For example, 67% of winners and only 42% of other retailers say pricing optimization is absolutely vital. Two percent of winners and 9 percent of other retailers say pricing optimization “would be nice to have,” implying they currently do not have pricing optimization systems. No winners said they see no need for it, compared to 2% of other retailers.
However, roughly half (49%) of winners strongly agree they need new pricing tools and are confident in their staff’s ability to leverage these tools for maximum benefit, compared to one-quarter (24%) of other retailers.
Retail leaders are also far more satisfied in their current capabilities than average and under-performers are. According to the survey results, 64% say they are pleased with their ability to establish a price strategy for regular and promotional products. That number (36%) is much lower for average and laggard retailers.
In addition, while average and laggard retailers lament the aggressiveness of the competition (60% call it their number-one issue), the top concern for the majority of retail winners (58%) is that consumers continue to ratchet up their focus on price.
The survey also revealed the top opportunities all respondents hope to address with pricing optimization:
- Grow revenue 72%
- Improve overall margins 65%
- Gain competitive advantage 54%
- Improve pricing mix due to inflation 53%
A recent survey by web data platform Bright Data supports the assertion that consumers are increasing their focus on price. When asked what factors typically influence their purchase decisions when shopping online, 82% of respondents said price. In addition, 74% of respondents said they would switch from their usual retailer if they found a better price elsewhere.
“In the end, retailers should know that closing the pricing readiness gap is now a critical component of overall retail strategy,” said Brian Kilcourse, managing partner of RSR Research. “It is clear that in order to win, precision pricing is a must-have, not a nice-to-have.”
“Retailers and consumers alike are experiencing a storm of challenges, including record inflation and energy prices, making price more important than perhaps any other value attribute,” said Anis Hadj-Taieb, GM of DemandTec. “Retailers – in a constant battle to fend off price leaders like Amazon and Walmart – know that even though offering a low price may not win new customers, having high prices will certainly cost them existing ones. As a result, to win customer share of wallet, precision pricing is a requirement for retailers to thrive in the market.”
RSR Research conducted an online survey from December 2021 through January 2022 and received answers from 114 qualified retail respondents.