B&Q, the U.K.'s largest home improvement and garden center retailer, is testing variable pricing with a goal of better tailoring deals to its loyalty card members.
Such pricing is being made possible by electronic shelf labels and WiFi technologies. The Telegraph wrote, "Under the scheme, WiFi-connected price tags will identify passing shoppers from mobile phone chips then access data from loyalty cards or past spending to reach a suitable price which will be displayed next to the item."
The promised benefits would work in three ways.
First, prices may change based on the time of day. Temporary reductions during off-peak hours could help improve traffic flow during the week to ease parking congestion and checkout wait times. The reductions could be across the board or differ for each loyalty cardholder.
Second, prices may change based on each customer's loyalty level, which B&Q believes could lead to more efficient incentives than widespread coupons and discounts. Mr. Cheshire told the Daily Mail, "It's all about special offers for individuals where we are looking at bundling offers or giving discounts."
Finally, prices may change based on demand, similar to how dynamic pricing works at airlines and hotels. Mr. Cheshire, who is on the board of Premier Inn, noted that when he joined the hotel's board, it had two different prices for hotel rooms and now has 10,000 through variable pricing.
"Look at how the airlines work and what you can do online, people are used to that," Mr. Cheshire told the Daily Mail. He added, "Yield management techniques are not new — it's just they haven't traditionally been used in retailing."
How receptive will shoppers be to variable pricing tactics at retail?