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Document Detail
Language: English

Will Omni-Channel Be the Death Knell of Localized Pricing?

 
 
 

Company: JDA
Tag: Retail
Forecasting
Omni-Channel


Retailers have spent considerable effort and made significant investments in better understanding local demand so they can provide localized promotions, assortments and pricing. But with the rapid rise of ecommerce and consumers' ability to compare prices online, it would seem the concept of localized pricing is in direct conflict with the price transparency that ecommerce offers. Does this mean omni-channel will be the death knell of localized pricing?


Even before the current consumer-driven omni-channel marketplace took hold, retailers knew they needed to get closer to their customers in order to grow revenue by better satisfying customers’ needs. Accordingly, retailers have spent considerable effort and made significant investments in better understanding local demand so they can provide localized promotions, assortments and pricing. But with the rapid rise of ecommerce and consumers’ ability to compare prices online from anywhere around the world, it would seem the concept of localized pricing is in direct conflict with the price transparency that ecommerce offers. Hyper-connected consumers now expect pricing to be consistent across all channels they shop. Does this mean omni-channel will be the death knell of localized pricing?

Localized pricing versus the need for price transparency is not the only challenge ecommerce has presented retailers, however. There is now much more competition on price across channels and geographies. With technology assistance, retailers have begun using dynamic pricing approaches to match prices found elsewhere in the selling universe. While this solves the immediate threat of losing sales on pricing issues, it tends to be a “race-to-the-bottom” where revenue is gained at the expense of margins. This dynamic pricing trend will likely subside as retailers realize the negative effect on their margins and bottom lines. However, a better approach is needed to both cater to local demand and ward off the negative impact of price transparency and race-to-the-bottom price wars.

 

 





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