Price transparency on steroids: The end game
Through a special arrangement, what follows is a summary of an article from Retail Paradox, RSR Research’s weekly analysis on emerging issues facing retailers, presented here for discussion.
As we careen into the 2014 Holiday Season, one thing is becoming apparent: the phenomenon called "price transparency" has moved on from simple things like a "RedLaser" app to full-fledged shopping bots that report the continual changes of prices on the web.
Googling "price checkers" brings up Consumer World’s Price Checker and a couple of others I’d never heard before. Trying "price comparison" got me pricegrabber.com and Shopify’s "ten best price comparison shopping engines," among others. In the game of "find the lowest price," consumers are still winning.
What’s more, more than one mass media article has revealed that some retailers actually increase their prices right before Cyber Monday, and even show those before-and-after prices. Even dynamic pricing seems to be at risk, as the general public is becoming aware that large retailers change prices up to nine times a day on many items.
This is important for several reasons. It suggests some caution when changing prices. Too much intra-day pricing runs the risk of irritating consumers and sending them elsewhere. This recalls the mantra: "Just because you can do it, doesn’t mean you should." It also means the key differentiator will not be price. The key differentiator will continue to be rapid fulfillment, solid in-stock positions, and excellent customer service.
If you can’t fulfill delivery promises this year, price isn’t going to matter. In fact, customer service and inventory reliability might even be more important that the actual products sold.
To add complexity to the mix, it’s clear that brands continue to investigate their relationships with consumers beyond just being a "low price alternative." A study RSR conducted with SPS Commerce found 50 percent of manufacturers are already selling direct to consumers, typically via digital channels. When push comes to shove, no one is going to be able to afford to underprice manufacturers themselves.
To pile more fuel on the fire, IBM just published the results of its first annual consumer brands study defining "brand enthusiasts," the loyal yet increasingly fickle consumer. We live in a world of "short attention span theater," where the next new thing can easily capture a seemingly loyal shopper’s fancy. Further, just because the shopper seems loyal, it doesn’t mean she wants to engage with brands. And that same enthusiast will enthusiastically write a really bad product review via social media.
This is the long way round reiterating that a pure pricing play is a dangerous game. Those door busters will lose their luster if consumers know the price was cheaper just five days before. Price is a zero sum game. Well-trained and helpful employees may well be the "long ball" retailers use to create and sustain advocates.
Are price comparison websites and dynamic pricing significantly diminishing the “low-price alternative” incentive for stores? Do you agree that price is becoming a zero-sum game?