Omnichannel changes how retailers make price and promo decisions
With the rise of click-and-collect and home delivery, ecommerce is growing rapidly. The U.S. market for online goods is expected to surpass $350 billion this year (Amazon accounts for about 30 percent of that amount) and exceed $525 billion by 2020, according to Forrester Research.
With this growth, retailers are seeing consumers splitting their spending across different channels for different purchases. They’re using smartphone apps, showrooming, price comparing and, in general, not acting within the traditional paradigm of seeing or hearing about a sale and then engaging with a retailer to satisfy the desire or need. And then there are the Millennials, the largest demographic cohort in history, who are increasingly looking for personalized and digital interactions and more engagement at every level and in every channel.
Some retailers have embarked on personalization programs, as with Whole Foods Rewards and Starbucks Rewards, while others are deploying a low-priced, deep discount strategy. Still others are trying to figure out the last mile and make delivery a customer and commercial success. All of these retailers need to be smarter about how they compete and make consistent pricing and promotion decisions across the store, online, via the app and in direct communications with customers.
Recent research from Precima and RSR Research shows retailers are most successful when they use an integrated approach of setting omnichannel prices and designing customer-centric promotions. Further, it indicates that the demand for meaningful personalization is growing at a rapid pace — demand for personalized offers grew 11 percent from 2015 to 2016, a trend we expect to continue. Supported by internal and external data, omnichannel marketing analysis helps companies determine the most effective channels for each customer segment, product category and channel.
Retailers have always needed to put the customer at the center of their thinking and operational model. Now, with real-time, data-based insights available to most marketers, front line execution on those insights is what will separate the winners from the crowd.
- Pricing 2016: Life Becomes Unmanageable – RSR Research
- When change is in store: How Starbucks, Stouffer’s and others manage transformation – Retail Customer Experience
DISCUSSION QUESTIONS: How must retailers adapt in order to make intelligent price and promotion decisions in an omnichannel world? Should decisions be separate or integrated by channel? How important is personalization to the omnichannel challenge?