Taking radically new steps to capitalize on the upcoming holiday season can seem daunting to retailers caught between the online giants and aggressive new specialty startups and discounters. But by adopting AI-powered price and promotion optimization solutions, retailers of all sizes in all sectors can develop highly targeted strategies to hold their own with both traditional and newer competitors, all while better engaging shoppers.
A number of key trends are clearly emerging this season that savvy retailers should factor into their price and promotion strategies:
Artificial Intelligence is Critical for Crafting Relevant Prices and Offers. Today’s shopper fully expects that retailers have enough data on them to know their preferences and patterns. Using AI-based pricing and promotion optimization enables retailers to understand which items their shoppers care most about, down to the item level and specific to shopper segments, channels and locations. Leveraging sophisticated algorithms to simultaneously factor in competitive elasticity and price sensitivity, retailers can present shoppers with offers and prices that are relevant and engaging. The power of AI is just beginning to be realized — according to a Revionics-commissioned study conducted by Forrester Consulting, a whopping 76% of retailers believe AI pricing would have a positive impact on shoppers.i
The US/China Tariff War Continues. With more than two-thirds of the consumer goods imported to the United States from China facing tariffs from the ongoing trade war, this is driving up costs – and uncertainty – substantially for retailers across the board. Retailers need to decide how much of the higher cost they will absorb and where, as well as which costs they can pass on to shoppers. These tough decisions carry potentially devastating customer loyalty ramifications, especially during the holidays. With AI-powered price and promotion solutions, retailers can gain highly granular insights into exactly where retailers must avoid alienating consumers with price hikes, and more importantly, where else in their assortment they can recover badly needed revenue and margins without alienating shoppers.
AI-Based Pricing and Promotion Comes to the Rescue
To help tackle these challenges and more, retailers can leverage the benefits of Revionics’ AI-based price and promotion solutions not only in the holiday season, but all throughout the year, every year. The solutions provide:
- Visibility to a retailer’s pricing team about how their shoppers feel and are responding to their prices and promotions.
- Dynamic Learning Tools that continually gain insight from every new price and promotion action from a retailer, delivering enhanced granularity and accuracy that evolves as quickly as shopper behaviors and market trends evolve.
- Alignment with Overall Business Goals while factoring in seasonality effects, trends and key market data, which help retailers make highly informed recommendations on pricing and promotional offers that align to articulated revenue, profit and volume objectives.
- Merchant Partner Compliance, taking into consideration a retailer’s operational constraints and merchandising pricing rules. The application blends these along with the science to deliver a price that will be accepted by the merchant partner.
- What-if Planning Scenarios that allow a retailer to simulate different price and promotion scenarios. For example, if there is a category that is not doing well, the retailer can run scenarios to find out what pricing and/or promotional approach may work better.
The good news is that for all the challenges retailers are facing for this upcoming holiday season, there are AI-based solutions that can help them navigate to ensure higher profits, strong revenues and most importantly, ongoing customer loyalty.
iRetail Success Requires Personalized, AI-Driven Pricing Strategies, a Revionics-commissioned study conducted by Forrester Consulting, October 2018