At a time when retailers struggle to maintain business health, under siege from discounters, online giants and rising costs, 52% of the weekly or monthly promotions they offer go to customers who would happily have paid full price – a stunning cause of lost margins that retailers can ill afford. A recently completed Revionics-commissioned survey conducted by Forrester Consulting explored shoppers’ behaviors and experiences with retail pricing and promotions, yielding some startling insights. It also pointed to some compelling imperatives for retailers to succeed in today’s hyper-competitive environment.
Revionics’ chief marketing and strategy officer Cheryl Sullivan, along with guest speaker Forrester VP and Principal Analyst George Lawrie, will be discussing the study results and implications for retailers at the NRF Big Ideas panel session titled “The Shoppers Speak: Shoppers Bust Long-Held Myths on Pricing and Promotions.” The panel, which takes place Monday, January 15, 11:30 a.m. – 12:30 p.m. EST at the Jacob K. Javits Convention Center EXPO Hall, Room 2, Level 1, will also provide retailer perspectives from Luke Rauch, senior director of U.S. insights for Walgreens.
The survey, which questioned consumers in the U.S., United Kingdom, France, Germany and Brazil, also debunks retailers’ hope of recouping margins by raising prices on limited-stock items. When asked how they would react if an item they wanted was available at a higher-than-expected price, nearly 60% of respondents said they would wait, not purchase the item at all, purchase it from a different retailer. A retailer seeking short-term gain faces the painful risk of losing sales and the hard-won loyalty of its shoppers.
For retailers, using science-based pricing and promotions to meet customers’ expectations and provide relevant offers when and where they matter is key to both shopper satisfaction and long-term business health. As the study notes, “These incessant and poorly targeted promotions create a climate of perpetual abundance and undermine the customers’ sense of urgency to buy. Instead of wasting money and resources on indiscriminate campaigns, retailers should focus on personalized and timely promotions.” It continues: “Retailers should use customer insights and data science to design the promotions that are most appropriate for different groups of customers in context.”
Sullivan sees a profound market shift as data science-based pricing and promotions change from “nice-to-haves” to now being “must-haves”. “This confirms what we found in the earlier study: that today’s shoppers worldwide are incredibly savvy and discerning,” Sullivan said. “Retailers who want to effectively reach their customers with meaningful prices and promotions must embrace a science-based approach now if they want to remain relevant and competitive.”