Imagine you want a new pair of shoes. You visit a shop, find the perfect pair, but they are a little pricey. Do you just accept the price and purchase them there and then? The chances are the answer is no. As we move into the technology age, there are limitless options for finding the best price. A quick Google search on your smartphone will find the same shoes at a better price. Technology is putting the power of getting the best price into the consumer’s hands.
In July, we ran a consumer survey in the UK looking at the impact technology is having on the way residents of the UK find the best price while shopping. Our survey found that technology is leading the way for new forms of bargain hunting, from comparison websites, voucher codes and mobile apps to price match guarantees. More and more people are finding that taking the time to look around helps save money. The evolution of the digital customer not only brings a variety of ways to get the best price, but also increases transparency in pricing from one brand to the next. With this comes the need for retailers to react accordingly.
Back to the future of bartering
Interestingly, the research found that the much promoted and advertised price-match guarantees have received surprisingly little traction with only 1 in 9 using the guarantees in-store. In fact shoppers are more likely to barter or haggle (14% of respondents) to get a better price. Arguably, this signals that we’re going back to the future with pricing models. For centuries, pricing was based on two people bartering for an individual item at a specific time. It was based on the price that could be achieved at that time and how much a customer was willing to pay. Then Frank W. Woolworth, founder of The F.W. Woolworth Company and the five-and-dime store, started buying directly from manufacturers and fixing prices. This practice has been the status quo for a century, but new technology advances are disrupting this. However, it’s not so much about what price can be achieved from a single person, technology is putting the consumer on an equal footing with the retailer and we’re moving to an era where it’s as much about the price the collective consumer is willing to pay, as it is about margins.
To the future of dynamic pricing
Dynamic pricing is becoming more commonplace, giving us a glimpse at the future of shopping. With the introduction of dynamic pricing into the mix, retailers can now make sure that all their products are positioned at the optimum price for customers and for their business. Taking into account a wide range of factors, such as previous price points, sales and competitor prices, dynamic pricing will determine the price that will keep retailers competitive in the market, while also giving customers a price that works for them. It’s not about price discrimination or personalised pricing, but a look at the bigger picture and finding the right price for all. It is especially important to find this balance in the age of showrooming.
The rise of the showroomer
Technology is making pricing a more pressing and competitive concern for all retailers. The survey revealed that show-rooming is becoming common practice across all age brackets, with over two thirds of shoppers admitting they use bricks-and-mortar shops to look at and try on items, only to return home and buy the item cheaper online. Furthermore, 9% admitted to making this purchase while they were still in the store, on their mobiles devices, rising to almost a quarter of 16-24 year olds. The latest report from the IMRG Capgemini e-Retail Sales Index revealed that online shopping is up 18 per cent in 2015 with smartphones taking the lion’s share – but it is also revolutionising the way that online products are priced.
Technology disruption – not just a buzzword
This is proof that mobile phones and ubiquitous internet access is truly changing the shopping experience with brands’ sales literally being taken from under their noses. It shows that the younger generations – growing up in the age of Ebay and Amazon, are more strategic in how they shop than previous generations. It highlights the importance of optimising your pricing strategy and continuously analysing your customer behaviour and the competition to remain a player in the market. As consumers become more accepting of price changes, technology is shifting their behaviour. Retailers can flourish in this new era if they take consumers’ needs and technology to heart.
The research was conducted by Censuswide, with 2,000 respondents aged 16+ in GB between 18-23 June. The survey was conducted from a random sample of UK adults. Censuswide abide by and employ members of the Market Research Society which is based on the ESOMAR principles.