Idle Cargo Ships Fuel the Retail Industry’s Holiday Pricing Strategies, According to Pricefx
Pricing expert at Pricefx says failure to launch flexible retail pricing strategies this holiday and in 2022 can mean diminishing returns
Retail has been forced to storm through the pandemic, through economic tidal waves, from global shipping roadblocks, labor challenges, and sweeping empty shelves. As we enter the second holiday season impacted by COVID-19, Pricefx, the global leader in cloud-native pricing software, urges retailers to be keenly aware of their strategies and be ready to adapt to changing conditions.
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“Retailers and e-commerce businesses this holiday season should be ready and able to make smart pricing decisions in real time, in response to minute market movements, multiple times a day”
“Retailers and e-commerce businesses this holiday season should be ready and able to make smart pricing decisions in real time, in response to minute market movements, multiple times a day,” said John Gilbo, retail pricing expert at Pricefx. “Competitors are constantly changing their prices in a very transparent market, filled with the side effects of the pandemic, like the broken supply chain and other challenging market conditions. This is an opportunity for retailers to reexamine their data, shift pricing algorithms, evaluate promotions, and other pricing strategies to close out the year with a profit.”
Pricefx recommends these pricing strategies for retailers and e-commerce, now through 2022:
Consider adjusting (and in some cases, scrapping) promotions and other markdowns.
Retailers this season have been great about shifting gears and not being married to prior strategies that worked before but may not now. It’s acceptable to change clearance and markdowns to highly seasonal goods if they’re going to be late due to the supply chain, or if they’ll miss peak sales periods. Some retailers have removed promotions that may result in getting shorted or take clearance markdowns deeper.
The supply chain is broken; now is the time to react, don’t try to fix it.
Labor constraints will continue, and so will the breaks in the supply chain. Both of these factors directly impact pricing and will greatly affect the financials of this season so retailers should adjust pricing — up or down — based on these conditions.
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Be flexible and ready to move at any time.
Success this holiday season means pricing decisions are structured at multiple levels, multiple times a day. Because competitors are continuously changing prices all throughout the day, retailers and e-commerce must keep watch and make their moves accordingly, in real time. The weather conditions could dictate a retailer’s next move, so should index prices, real-time exchange rates, and a plethora of other factors.
Prioritize data, internal and external, as your strongest asset.
Internal data is a great place to start with creating a baseline for customer insights that dictate pricing, like extra cost data, real-time inventory data, historical data, and more. Identify Key Value Items (KVI) to prioritize items to focus on this season. External data sources should also be watched closely, from inventory to market share and other categories such as price segments and bi-directional data. Collect SKUs for competitors across different channels. And for both internal and external data, continue to cleanse, augment and challenge data as an ongoing process, through this holiday season and moving into 2022.
Consider market conditions, such as inflation.
Find strategies and tools to understand an inflationary environment and what should be done in response. Retailers need to understand these market conditions to change prices in a timely manner, which will determine profit margins and customer loss or gain.
