Think of it as Retail Price Mythbusters, Shopper Edition. In a recently completed Revionics-commissioned survey conducted by Forrester Consulting, shoppers from the U.S., United Kingdom, France, Germany and Brazil revealed their pricing expectations and tolerances – including some findings that defy conventional wisdom.
The survey, which questioned consumers about their price perceptions and shopping behaviours across multiple retail categories, found that an overwhelming 78% of shoppers think it is fair to use data science to increase and decrease prices as long as they are presented with prices they’re willing to pay. They’re even fully prepared for Dynamic Pricing across various retail sectors, with only 6% saying they don’t think it is fair at all for prices to change dynamically. And most shoppers do not expect consistent pricing between online and in-store channels, with customers generally expecting less expensive prices online than in stores, with the exception of groceries.
A clear theme that emerges from the data is that customers accept that scientific pricing is ‘fair,’ while the other side of the coin is that pricing based solely on the merchant’s judgement across thousands of items and hundreds of locations inevitably appears arbitrary and unfair. For the retailer, that means the use of science-based pricing technology to meet customers’ expectations while maintaining a healthy business is critical.
As the study notes in its conclusion, “The research points to the critical importance of science-based pricing technology in meeting customers’ expectations. It also highlights the role of technology in delivering contextually relevant promotions and the importance of applied technology in selecting the right portfolio of price and promotion tactics.” It continues: “[Retailers] need powerful tools to devise the most attractive portfolio of pricing and promotion tactics to deliver a compelling proposition to each of their target markets.”
Revionics Chief Marketing and Strategy Officer Cheryl Sullivan sees compelling opportunities for retailers who are attentive to leading market indicators. “Even before the study, our science was telling us that shopper realities were out of synch with some of the commonly held industry assumptions about shoppers expecting consistent pricing across channels, being suspicious of science-based pricing, the degree of passiveness around price matching policies and loyalty to specific channels, promotional vehicles and offer types. These results confirm that shoppers are even more discerning and demanding than retailers think. With consumer and market conditions change ever more rapidly, retailers need primary research and self-learning models to help them keep up with shoppers’ expectations and behaviors,” Sullivan said.
Some of the research findings confirm behaviors that retailers have already experienced with a vengeance. Customers want the best deal and will search for it – only 9% will buy at full price and only 5% will accept the first price they see. And 81% said they shop around for the best price on products they want to purchase, but surprisingly only 17% said they would demand price matching on products they wish to purchase with this numbers dropping to 9% in the U.S., 8% in the UK and 4% in Germany.