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Retailers Continuously Change Prices Yet Can’t Measure Impact


Research_pieceRetailers are responding to increased competition across channels with aggressive and continuous price changes. Business challenges from competitors as well as customers and shareholders drive these ongoing price promotions and adjustments. Yet as retailers plan and execute their pricing cycles, most cannot predict the impact of price changes, nor truly analyze the effectiveness of those changes.

These are among the findings revealed in a Retail Systems Research (RSR) Benchmark 2013 report, titled: Tough Love: An In Depth Look at Retail Pricing Practices. The study is based on a survey of 134 retailers, gauging their pricing challenges, opportunities and technology adoption plans.

Survey data indicated that “while some retailers have succeeded at high stakes promotion wars driven by the self-fulfilling prophecy of consumer price sensitivity, others are failing ― sometimes spectacularly ― even as the shopper becomes more and more accustomed to ever more dramatic and frequent promotions,” according to the report. In fact, “those [retailers] who over-perform on year-over-year comparable sales are far more likely to stay the course in their pricing strategy than their competitors.”

Measurement was revealed as the priority component missing from price promotions. To make pricing a fully contributing strategic solution for retailers, constant and thorough results measurement needs to take place. “The pricing cycle of ‘Plan - Execute – Measure’ falls apart if you ignore any point in the circle,” RSR stated in the report. “And retailers have been ignoring Measure.”

In addition to analyzing the effect of price changes, retailers must measure the influence of conflicting channel prices on the customer. They also must assess the cost impact of price changes on physical stores, where adjustments can’t be made as easily as in digital channels.

Technology Enablers

The 33-page RSR report also looked at the technologies enabling retailers to take advantage of the pricing opportunities they identify. The top technologies currently being evaluated by respondents include:

  • Markdown forecasting and planning (24%);
  • Promotion optimization (23%);
  • Inventory management/availability as a price driver (23%);
  • Regular price optimization (20%); and
  • Price intelligence (18%).


The RSR research is free with registration. Click here to download the report.

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