Introduction of Next Gen Dynamic Pricing in Physical Stores
Dynamic pricing is usually considered a non-starter for physical retailers. Despite the promise of revenue increasing by up to 30% and double digit profit margin growth, physical store retailers have been reluctant in the past to fully deploy dynamic pricing. After all, it’s nearly impossible to manually update prices on the thousands of items found in stores.
As we move into 2021, however, we’re seeing a positive new trend happening in physical stores. Retailers are introducing electronic shelf labels (ESL) into their stores. These digital price tags are great for improving the customer’s in-store experience. They display clear prices to the consumer in a way that price tags often cannot.
However, ESLs provide another huge benefit to retailers. By connecting a dynamic pricing engine to an ESL system, retailers finally have the power to change prices on the fly, much the same way that prices are updated on ecommerce sites. Retailers who adopt dynamic pricing coupled with ESLs can compete more effectively on price with their online competitors.
The marriage of dynamic pricing to ESLs is something we have started calling Next Gen Dynamic Pricing, and we believe we will be seeing a lot of that in grocery stores and other physical stores in 2021.
Improved Food Waste Prevention in Grocery Stores
Grocery stores throw away thousands of dollars worth of bad produce, expired dairy, stale pastries, and other products that go bad every day. For years this has simply been considered a cost of doing business for supermarkets. However, we believe we are going to see some major changes in reducing food waste in 2021.
Grocery stores are starting to use dynamic pricing as a way to move products before they go bad. In the past, there was no reason for a customer to reach past the milk that expired in a week and grab a carton with three weeks remaining before its sell by date. However, with dynamic pricing and ESLs, we expect to see pricing adjustments based on inventory levels and sell by dates.
As products move closer and closer to the end of their shelf life, grocers will have enhanced flexibility be able to move groceries before they go bad. By motivating consumers with discounts on products, we believe grocers will significantly slash the amount of inventory they discard every day. Best of all, using the artificial intelligence built into the system, the dynamic pricing engine will be able to find the highest prices consumers will be willing to spend on food as it nears its sell by date, maximizing the profits on merchandise that was simply being tossed.
Improved Sales on Old Models in Electronics Stores
Grocers aren’t the only ones dealing with products that go bad. Electronics retailers often are stuck with high inventory levels of last year’s merchandise when new models are released.
We believe 2021 is the year that changes, as retailers use dynamic pricing in the weeks before new product releases to reduce inventory levels before the newest models hit the store shelves. As in grocery stores, AI tools will help maximize profits on those items, and leave plenty of shelf space for the latest gadgets.
