STORES Magazine -August 2017 - 42

n

PRICING

Grocery has grown in its sophistication of
personalized couponing, and is focused on
"ways to broaden the basket," she says.
That's a challenge for other industries. The
frequency of purchases and the variety of items
means grocery has deep shopping history data,
compared with an average retailer that doesn't
encounter shoppers that often.
"But the same general principal can be
applied," Valentine says. "Use personalized
promotions to expand people into other
product segments based on what you know
about them and grow the basket."
Grocery proves that "coupons are still a
driver," Gregorski says. "It doesn't matter what
category." Grocery will provide additional
insights when it fully moves to ecommerce -
that will put even more pressure on retailers to
make sure they don't lose shoppers, she says.
Market Track research shows that people
change stores or products at a rate of 80
percent if they are incentivized by a competitor.
"People are much more fickle than they used
to be," she says. "They know retailers are
working really hard to capture their share of
wallet."
That may not be a negative; personalized
pricing offers an opportunity for "retailers to
understand price sensitivity and catch highvalue customers before they switch to another
retailer," Mitchell says.
"Or they can offer more aggressive pricing
on a set of products that can build customer
loyalty without giving away excessive margins
compared with trade area market pricing."
DANGER AHEAD
A quick internet search on personalized
pricing and another, more ominous term shows
its power: pricing discrimination. As data is
used to segment shoppers based on certain
patterns, there is a risk of crossing a line.
"People want to trust that a business they are
engaging with is fair," Valentine says. "Once
you violate that trust, it's hard to get it back."
Retailers shouldn't be afraid to try
personalized pricing, which has long roots
- Valentine points to bartering and student
or senior discounts. The key to success lies in
transparency. "In socially accepted examples,
nothing is hidden," she says.
"You know that you have to negotiate,
or to meet certain age criteria. The more
that enterprises can have that transparent
relationship and let people review the
42

STORES August 2017

information that you have about them, the more
sustainable personalized pricing will be."
ANOTHER CLUE
As with so many aspects of today's retail, data is
the key. "Our advice is to make sure that you can
walk really well before you run," Valentine says.
She recommends that retailers first work
on their internal foundation, which includes
integrating data across channels and being able to
match a single consumer's behavior across those
channels, and then go after competitive data.
"I don't think anyone has perfectly solved the
competitive data issue for stores," Valentine says.
Many collection mechanisms are antiquated,
though innovative companies are taking a
creative approach with a combination of data
collection and imputation algorithms.
Gregorski notes that retailers must get up to
speed on pricing differences by market and ZIP
code. "That seems a tier above personalized
pricing, and it is," she says. "But if you don't
have that, you can't gather data on your shoppers
and be informed in their habits, propensity
to buy and thresholds before they'll go to the
next retailer."
Some retailers are successfully identifying
what to market to individual households and
customer segments. "Next they need a well-oiled
process to analyze the impact of price changes by
hyperlocal geography," Mitchell says.
"The goal is to marry online and offline
demand signals - which involves capturing
online shoppers and those geolocated in specific
trade areas - into a pricing strategy tailored for
specific customer segments."
Retailers who can capture that stand to
gain profitability, Gregorski says. "I do think
it's a challenge based on the fact that you are
aggregating that behavioral data from a lot of
different places and trying to culminate that in
one profile."
Ultimately, today's retailer has to forge a new
relationship with the shopper by "giving them
things that they value and not giving them things
that they don't value," Baird says.
"That's the part where retailers have been getting
into trouble. Consumers ... expect that 'You know
something about me. If you know something about
me, I expect you to use it to my benefit, too.' I don't
think we can come back from that. That's what is
pushing this more than anything else."
Sandy Smith grew up working in her family's grocery store,
where the only handheld was a pricemarker with labels.
STORES.ORG


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Table of Contents for the Digital Edition of STORES Magazine -August 2017

Editor’s Page
President’s Page
Retail Politics
NRF News
Trends
Retail People
Hot 100 Retailers
Forward Thinkers
Personalized Pricing
C2W
Q&A
Store Operations
Omnichannel
Marketing
Online
Finance
Business Operations
Startup Spotlight
Security
Fraud
STORES at 100
NRF Communities Update
End Cap
STORES Magazine -August 2017 - intro
STORES Magazine -August 2017 - cover1
STORES Magazine -August 2017 - cover2
STORES Magazine -August 2017 - 3
STORES Magazine -August 2017 - 4
STORES Magazine -August 2017 - 5
STORES Magazine -August 2017 - Editor’s Page
STORES Magazine -August 2017 - 7
STORES Magazine -August 2017 - President’s Page
STORES Magazine -August 2017 - 9
STORES Magazine -August 2017 - Retail Politics
STORES Magazine -August 2017 - NRF News
STORES Magazine -August 2017 - Trends
STORES Magazine -August 2017 - 13
STORES Magazine -August 2017 - 14
STORES Magazine -August 2017 - 15
STORES Magazine -August 2017 - Retail People
STORES Magazine -August 2017 - 17
STORES Magazine -August 2017 - 18
STORES Magazine -August 2017 - Hot 100 Retailers
STORES Magazine -August 2017 - 20
STORES Magazine -August 2017 - 21
STORES Magazine -August 2017 - 22
STORES Magazine -August 2017 - 23
STORES Magazine -August 2017 - 24
STORES Magazine -August 2017 - 25
STORES Magazine -August 2017 - 26
STORES Magazine -August 2017 - 27
STORES Magazine -August 2017 - 28
STORES Magazine -August 2017 - 29
STORES Magazine -August 2017 - 30
STORES Magazine -August 2017 - 31
STORES Magazine -August 2017 - 32
STORES Magazine -August 2017 - 33
STORES Magazine -August 2017 - 34
STORES Magazine -August 2017 - 35
STORES Magazine -August 2017 - Forward Thinkers
STORES Magazine -August 2017 - 37
STORES Magazine -August 2017 - 38
STORES Magazine -August 2017 - 39
STORES Magazine -August 2017 - Personalized Pricing
STORES Magazine -August 2017 - 41
STORES Magazine -August 2017 - 42
STORES Magazine -August 2017 - C2W
STORES Magazine -August 2017 - Q&A
STORES Magazine -August 2017 - 45
STORES Magazine -August 2017 - Store Operations
STORES Magazine -August 2017 - 47
STORES Magazine -August 2017 - Omnichannel
STORES Magazine -August 2017 - 49
STORES Magazine -August 2017 - Marketing
STORES Magazine -August 2017 - 51
STORES Magazine -August 2017 - Online
STORES Magazine -August 2017 - 53
STORES Magazine -August 2017 - Finance
STORES Magazine -August 2017 - 55
STORES Magazine -August 2017 - Business Operations
STORES Magazine -August 2017 - Startup Spotlight
STORES Magazine -August 2017 - 58
STORES Magazine -August 2017 - Security
STORES Magazine -August 2017 - 60
STORES Magazine -August 2017 - Fraud
STORES Magazine -August 2017 - 62
STORES Magazine -August 2017 - 63
STORES Magazine -August 2017 - STORES at 100
STORES Magazine -August 2017 - NRF Communities Update
STORES Magazine -August 2017 - End Cap
STORES Magazine -August 2017 - cover3
STORES Magazine -August 2017 - cover4
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