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Price personalisation calls for new skills

Pricing and promotion was one of the key topics to emerge at US retailer conference the National Retail Federation’s Big Show in New York last week.

Pricing and promotion was one of the key topics to emerge at US retailer conference the National Retail Federation’s Big Show in New York last week.

While price transparency has been held up as a universal truth, the seismic shift in the way customers interact with retailers and the arrival of new online retail models is subverting the way we shop.

Today, the customer is in control because they can price check before they buy, with pessimists believing this will lead to a race to the bottom on price. Others see personalisation as offering hope – an antidote to the discounts and Sales that hallmark the high street.

How retailers might start to claw back margin through personalised pricing varies. Theories include behavioural pricing, where data around Facebook ‘likes’, for example, could be used to determine pricing. Consultant McKinsey’s presentation at the Big Show put forward zipcode pricing, where customers punch in their zipcode before being offered a price. Both, however, are extremely crude and not necessarily useful versions of the price personalisation I envision – a bit like what brick-sized mobile phones of the 1980s are to today’s smartphones. To get to this vision, retailers will need to become masters of data and experts in the kind of systems used today to calculate the odds in international finance houses.

The real-time, personalised marketing we’re already seeing – from deals offered based on geolocation to ads based on Twitter mentions or Facebook likes – will need to evolve into a pricing dialogue with consumers. Retailers will need to develop the necessary marketing skills. And I’d bet there’ll be a sizeable group of customers who’ll be ready for it long before we are.

  • Lorna Hall is senior retail editor at trends analysis website WGSN

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