DISCUSSION
Will 2023 become the year that consumers get comfortable with dynamic pricing?
Written by Melissa Minkow
This is the second in a series of articles from members of RetailWire’s BrainTrust panel speculating on coming retail trends and developments for 2023.
This holiday season has ushered in a period of peak price-sensitivity. Consumers continue to wonder whether or not we’re in a recession, and while spending is continuing on, there’s certainly an understanding that times are tougher. This exceedingly cost-conscious mindset, paired with the deep discounts occurring to clear out record excess, unwanted inventory, is raising the expectations for daringly low prices. As retailers evolve to keep price-sensitive shoppers satisfied, a variety of dynamic pricing models will become far more common in the market in order to ensure price competition without bottom line erosion.
There is certainly sufficient technology to offer shoppers individualized prices, but consumers are fully aware that dynamic pricing doesn’t always, or often, work in their favor. (The recent Taylor Swift Ticketmaster fiasco is a prime example of fluctuating pricing going wildly awry.) Considering how skeptical consumers are of individualized pricing, transparency is crucial when leveraging a dynamic pricing model. While surge pricing à la Uber clearly conveys the why behind a price hike, there’s still a level of indignation felt by many users simply because of how out of their control that hike feels. Enter: “haggler’s market” pricing and more sensitive, communicative dynamic pricing.
In a haggler pricing model, individual consumers negotiate one-to-one with brands via advanced technology. The technology behind the negotiation is responsible for marrying the best interests of both consumers and retailers so that shoppers are confident they’re getting the best deal and brands aren’t slashing margins across the board.
In addition to seeing more negotiation commerce, I expect to see more widespread use of traditional dynamic pricing, but in ways that make consumers more comfortable with the process.
Digital price stickers, for example, that change in real time next to visibly changing inventory numbers will likely become more commonplace. Retailers will have to be sure that this approach doesn’t simulate artificial “limited time only” messaging and is clearly in congruence with actual fluctuations in stock.
Alternatively, messaging that details why prices are set where they are and provides estimates as to when they’re anticipated to go up or down is also an honest and welcomed iteration. I expect to come across this more frequently. Ultimately, the successful use of dynamic pricing in 2023 will require that it is more communicative and empowering for customers at an individualized level. This era of disciplined and researched consumption demands better transparency and tailored price-setting.
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