Findings indicate retailers could recoup millions in profits by using AI pricing technologies
Ongoing economic volatility and inflation is amplifying the pressure on retailers to optimize pricing and maximize customer loyalty, an issue analyzed in a new report published today by Coresight Research, a research and advisory firm specializing in retail and technology. The Future of Pricing: How AI Is Transforming Price Planning in Retail is made available to non-subscribers of Coresight Research in partnership with Competera, a pricing solution company that empowers retailers to set and maintain optimal pricing in real time using artificial intelligence (AI).
The Future of Pricing: How AI Is Transforming Price Planning in Retail report includes results from a February 2024 survey of U.S. retailers and outlines the measurable advantages of utilizing AI for pricing decisions, as well as the obstacles retailers must overcome to maximize the returns of AI pricing technology investments. Historically, incremental price adjustment decisions have been made by large teams using spreadsheets, data sets, and formulas. But more retailers are realizing that AI pricing can mean the difference between millions in profits or millions in losses. According to the survey, 92% of respondents are using AI pricing today, but integrating data across the enterprise for the most accurate results remains a challenge.
According to Coresight Research’s analysis, using AI-based pricing solutions, retailers across different verticals can increase annual revenues by 10%, on average, and improve margins by as much as 5%, but retailers need to better integrate AI pricing with other systems to maximize its potential. Another recent Coresight Research survey found that more than half (52%) of retailers cannot execute at least 10% of their promotional campaigns properly and are mispricing 10% of their products under any given category, in any given selling period.
“The consumer is more price sensitive today than they have been in years, which makes it critical for retailers to have the right insights at the right time to be able to adjust pricing in real-time,” said Coresight Research CEO Deborah Weinswig. “What we learned from this survey is that while retailers are using AI pricing tools, most still have a long way to go to integrate pricing tools with other enterprise technologies and systems to maximize its benefits. The retailers who integrate the fastest are going to be the companies that we see rising above economic driven pricing challenges in the months ahead.”
“Recent advancements in machine learning have made sophisticated pricing technology accessible to retailers of all sizes, empowering them to implement complex pricing strategies that deliver optimal prices quickly and efficiently,” said Alex Galkin, Founder and CEO of Competera. “We’re seeing more investments in solutions that harness the latest deep learning technology, which can process 10x more pricing and non-pricing factors than humanly possible, to continuously calculate billions of price combinations. With the help of these AI tools, pricing becomes a means to stronger profitability and customer loyalty.”
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