ActiveViam has released a new study on pricing strategies and concerns from retailers. For the “Pricing Strategy Survey,” ActiveViam polled more than 500 senior pricing decision makers and executives at retailers with at least 100 employees from 21 May to 2 June 2 2019.
Nearly three-quarters are worried they will be outpriced by Amazon
When asked how concerned retailers were about being outpriced by competitors, 71% said that they are concerned about being outpriced by Amazon -- with 41% saying they are “very concerned.” In addition, 49% of respondents were concerned about being outpriced by other brick-and-mortar retailers, while 42% said they were concerned about being outpriced by DTC brands.
“It is no surprise traditional retailers are worried about being outpriced by Amazon,” said Kathy Perrotte, Managing Director and Co-Founder, at ActiveViam. “From its wealth of customer data to its vast product offerings, Amazon is able to fluctuate their prices very intelligently and very quickly.”
55% are highly concerned about data quality and accuracy
Per ActiveViam’s findings, 55% of respondents said that they are concerned that their own internal pricing data, such as geo-pricing and price consistency data, is either inaccurate or incomplete. In addition, 54% of respondents said they are concerned that the external competitor pricing data they receive and factor into pricing models is either incomplete or inaccurate. This can have dire consequences on a retailer’s ability to consistently set prices across channels, drive revenue and stay true to its value proposition and brand image.
“Data quality is of paramount importance to winning on price,” said Perrotte. “The fact that so many retailers are not only worried about their external data quality but their internal data quality is quite alarming. Retailers really need to think about the infrastructure they have in place and invest in better tools and strategies to ensure they have the best quality data possible.”
Retailers have issues aligning pricing strategies
When asked what was their biggest challenge when it comes to managing their pricing strategy, 40% felt it was aligning pricing between online and in-store pricing. Other responses included lack of insight into competitor pricing (23%), a lack of proper tools to easily adjust pricing quickly (20%), and geo-based pricing (13%).
“In such a competitive marketplace, retailers need to be equipped with the right tools to make accurate and precise decisions about their pricing strategy,” said Perrotte. “Additionally, achieving consistency between locations as well as online and in-store sales is essential to making sure that each channel is as optimised as possible to generate profits.”
Moreover, a third of respondents said their company has no price optimization tools in place whatsoever.
61% feel they cannot adapt to optimize pricing quickly enough
Per the study’s results, 61% of respondents said that they were concerned that their company was unable to optimise their prices quickly enough.
“In the fast-changing world of retail, pricing opportunities and movements can arise at the drop of a hat,” Perrotte said. “To stay on top, retailers need to be able to adjust prices on the fly to remain competitive.”
Additionally, 52% of respondents are concerned about their company’s ability to maintain the proper ‘price image’ -- or that their organisation’s prices are consistent with their overall brand image.
“Winning on price is about more than just the numbers,” said Perrotte. “It is about staying consistent with the image your brand is trying to project and its value to consumers. Without managing this image properly, brands can easily fall behind competitors.”