Retailers are starting to understand that to win in tomorrow’s market they need to stop ignoring the oceans of data they have in their organization. They need to harness it to make real time pricing decisions. Now, technology is surfacing to help them become more efficient, productive, and finally switch from centralized and routine driven operations to those that are localized and insights driven.
The data that retailers need to analyze to be able to optimize prices is vast. In fact, nearly 85% of this data goes untouched. This is because existing analytics providers dictate rather than listen. They say it can’t be done, there’s too much data, or it’s too hard. As we begin to usher in the retail renaissance, stores need to start by enhancing themselves with the right technologies
Retail is transforming before our eyes. Most brick and mortar stores are paralyzed and confused. They don’t know how to take the first step on what to do, where to improve upon, and even whether or not to use technology solutions at all. This window is closing fast and if retailers don’t change then they won’t survive. They’ll further fuel the cries of the retail apocalypse.
The price a customer pays is a key component of a positive customer experience. Creating the right price, at the right time, for the right customer is a must for any retailer that wants to attract more shoppers. Ecommerce kings like Amazon have built much of their business around knowing what you want when you want it. They show you persuasive ads that contain optimized pricing. Amazon knows that nearly 70% of purchases are driven by the price of the item.
So how do the eCommerce giants do it so well? They use artificial intelligence (AI) to inform staff and automated processes to update prices customized to an individual. More than 40% of their marketplace revenue is being generated from AI driven pricing! Unfortunately for brick and mortar retail, optimizing prices for all items across a physical store has additional challenges and remains a problem.
Why The Struggle?
Again, the large data companies want you to know that retail teams need to analyze too much data to make real-time pricing decisions. Most retailers stick to SKU item pricing which means setting prices for products independently without factoring in all the cross dependencies between price changes and demand.
The real problem here is that they’re only interested in upgrading your systems. Needing a new point of sale system isn’t always the best solution, especially if one of the few benefits you’re getting is your infrastructure is now in the cloud. Replacing one hindered faux omni-channel system for another does nothing to open up the data to drive real-time price optimization, customer behavior analysis, location based insights, and “market of one” customer experience personalization.
In order to adopt these strategies, retailers don’t need another point-of-sale system, loyalty system, supply chain management system, etc. They’re all just pieces of the pie. No one is trying to be the most important part of the pie – the pie plate. Without it, you have chaos with you ingredients and the same is true for your data. Retailers need a platform that centralizes these components and opens up all the data, making what’s currently invisible now visible. Once you can do this then next generation deep analytics and artificial intelligence become a breeze.
Benefits of AI Based Pricing
Artificial intelligence algorithms can allow pricing teams to provide real-time price recommendations. They can help stores move to insight based pricing. All the dependencies between products are factored in. Retailers generate more per item and are capable of making real-time, data informed decisions across the entire organization – and as granular as a single item’s price at a single location. Of course, this reflects in increased revenue. An additional feature here is reduced monitoring. Retailers no longer need to watch over and manually analyze data to change the prices on countless items across their entire inventory.
How To Accelerate The Renaissance
Retailers should consider working with a software as a service based data platform, deep analytics, and artificial intelligence provider. The value they bring is felt in disruptive and forward thinking functionality. They specialize in these hi-tech and hi-touch technologies and eliminate the need to consider handling these initiatives in house. Retailers will see near immediate results, especially in increased revenue.
Retailers are starting to understand that to win in tomorrow’s market they need to stop ignoring the oceans of data they have in their organization. They need to harness it to make real time pricing decisions. In today’s connected world it shouldn’t be this difficult to link, understand, and analyze your data. It’s still really hard to be really sophisticated. We’re here to help with technology designed to turn retail data into knowledge, action, and revenue.