Real Time Pricing - Coming to a store near you

Talitha Boitel-Gill our consultant managing the role
Posting date: 1/21/2015 9:30 AM

Real-time pricing: coming to a store near you.

Personal shopping is on the brink of taking on a whole new meaning. The advancement of mobile technology and the information held on individuals' shopping histories means product prices could soon adapt as shoppers walk up and down their supermarket aisle.

Gone are the days of retailers only being able to actively manage the price of a small number of products once a week. Algorithmic pricing and real-time competitive pricing data allows the changing of product prices on the fly.

Amazon is at the forefront of such "real-time pricing" initiatives, which have traditionally been the preserve of online-only retailers.

However, brick-and-mortar retailers in the US are showing their UK counterparts the limitless possibilities when it comes to dynamic pricing.

Independent consumer electronics retailer Abt Electronics pipes competitive pricing data gathered by Dynamite Data into its point-of-sale systems to allow staff to negotiate prices at the point-of-sale, according to Dynamite Data chief executive Diana Schulz.

Meanwhile, another one of Dynamite Data’s unnamed clients uses electronic shelf labels and re-prices every product in their stores each morning based on the prices of its rivals.

The ability to change prices dynamically is not simply the preserve of all-powerful brands such as Walmart or Target either.

Schulz explained that her company has "seen these types of technologies in both large and mid-sized retailers" despite the "investment in technology and competitive data that is typically needed".

Commercial sensitivities

Back in the UK things are not quite as close to a Minority Report-style personalized shopping experience.

Even online-only specialists Shop Direct and Ocado claim they do not engage in real-time pricing, while those that do heavily use real-time data to adapt their prices such as the airline brands are reluctant to discuss the issues.

EasyJet declined to comment when contacted because of commercial sensitivities around discussing pricing-related issues.

Grocers Tesco, Asda and  Sainsbury’s have all claimed they do not engage in real-time pricing, with the latter two both citing the logistical difficulties in aligning such a strategy across their physical stores and online presence.

A Sainsbury’s spokesman claims real-time pricing would result in "chaos", while an Asda spokeswoman saying such a strategy would be a "nightmare".

Yet, despite such a negative perspective from UK brands, experts are confident real-time pricing will arrive on these shores sooner or later.

Simon Spyer, a partner of VCCP data arm Conduit who began his career working on the Sainsbury's Nectar business, believes the UK will begin to see "more and more" of matching rivals’ prices dynamically, particularly in the grocery and electrical sectors.

He explained that real-time pricing is likely to affect "anything where the product is largely commoditized" and in instances where the only way retailers can differentiate that product is by "being really keen on price".

Electronic labels

As it stands the major barrier for implementing "real-time pricing" in-store is changing the prices to match the online price, a hurdle that could be removed by the electronic shelf labels being pioneered in the US.

Schemes like Tesco Price Promise and Asda Price Guarantee already use real-time data to 'price match'In the UK various retailers have dipped their toes into the water when it comes to electronic shelf-labeling including a Nisa Local store in Shrewsbury that launched a trial in August last year to carry out automatic pricing and timed promotional updates, alongside QR codes and meal deals.

Tesco has also experimented with electronic labeling on various occasions with trials in 2006 and 2008, but the retail giant has yet to combine real-time pricing with its electronic labels.

Spyer claims "the capability is definitely there both online and offline – it is whether there is a business rationale for investing in it".

However, with major UK supermarkets lacking a pressing reason to implement real-time pricing, that investment may be slow in arriving, argues Kaye Coleman, the founder of price consultancy Ripe Strategic.

Coleman explains: "The supermarkets already do price matching – it is not so sophisticated but price matching is already happening".

Schemes including the Tesco Price Promise, the Asda Price Guarantee and the Sainsbury’s Brand Match currently use real-time data to "price match" by offering money off the next shop.

A cynic could argue the supermarkets should knock money off at the till rather than relying on customers to redeem their vouchers at the next shop, but such an action could hit the companies' bottom line.

Mobile sophistication

The growing sophistication of mobile marketing is also likely to revolutionize the way brands approach their price matching.

"If you can come up with a value proposition where I check-in [on my mobile] when I walk through the store for the first time and that presents me with a personalized experience based on my purchase history then I could see the benefit for a customer and a retailer," said Spyer.

The trick for retailers is persuading customers to adopt such behavior, but the offer of being delivered ever-changing personalized price offers and messages in-store is a compelling proposition.

Personalization is already a priority for retailers. Sainsbury’s uses anonymized shopping data gathered from the Nectar card to personalize offers.

The levels of personalization offered by Sainsbury’s are increasingly complex. If a female customer buys folic acid they will be sent promotions on other pregnancy-related supplements during the pregnancy period and offers on nappies further down the line.

UK retailers are sure to keep a close eye on developments over the Atlantic, with Schulz claiming she knows of clients that are piloting technologies that enable in-store personalized discounts.

The challenges on the high-street mean there will inevitably be more casualties, but real-time pricing does not have to be the sole preserve of online-only retailers.

Innovative ways of manipulating real-time data could be the shot in the arm the high-street retail industry so desperately needs.

This article was first published on marketingmagazine.co.uk

Click here for the article on the web.

Related blog & news

With over 10 years experience working solely in the Data & Analytics sector our consultants are able to offer detailed insights into the industry.

Visit our Blogs & News portal or check out the related posts below.

Where Tech Meets Tradition

Where Tech Meets Tradition

If you’re lamenting the decline of handmade traditional products, cast your cares aside. There’s a new Sheriff in town and its name is, Tech. Just a generation ago, children would leave the farm or the family business, go to school, and then move on to make their place in the world doing their own thing. Away from family.  Today, the landscape has changed and those who have left are coming home. But this time, they’re bringing technology with them to help make things more efficient and more productive. Is Tech-Assisted Still Handmade? In a word, yes. Artists still make things “from scratch”, except now technologies allow them to not only see their vision in real-time, but their customers, too. Have you ever wondered what the image in your head might look like on paper or in metal? What about the design of prosthetic arms and healthcare devices by 3D printers? You’re still designing, creating.  But just like any new technology, there’s still a learning curve. Even for cutting-edge craftspeople who find that sometimes, the line between craftsmanship and high-tech creativity may be a bit of a blur. Not to mention the expense for either the equipment required or being able to offer art using traditional tools at technology-assisted prices. Somewhere between the two, there is a trade-off. It’s up to the individual to determine where and what that trade-off is. Life in the Creative Economy One of Banksy’s paintings shredded itself upon purchase at an auction recently. AI is making music and writing books. Augmented Reality, Virtual Reality, and Blockchain all have their place in the creative economy from immersive entertainment to efficient manufacturing processes. Each of these touches the way we live now. In a joint study between McKinsey and the World Economic Forum, 'Creative Disruption: The impact of emerging technologies on the creative economy', the organisations broke down the various technologies used in the creative economy and how they’re driving change. For example: AI is being used to distill user preferences when it comes to curating movies and music. The Associated Press has used AI to free up reporters’ time and the Washington Post has created a tool to help it generate up to 70 articles a month, many stories of which they wouldn’t have otherwise dedicated staff.Machine Learning has begun to create original content. Virtual Reality and Augmented Reality have come together as a new medium to help move people to get up, get active, and go play whether it’s a stroll through a virtual art gallery or watching your children play at the playground.  Where else might immersive media play out? Content today could help tell humanitarian stories or offer work-place diversity training. But back to the artisan handicrafts.  Artistry with technology Whilst publishing firms may be looking to use AI to redefine the creative economy, they are not alone. Other artists utilising these technologies include:  SculptorsDigital artistsPaintersJewellery makersBourbon distillers America’s oldest distiller has gotten on the technology bandwagon and while there is no rushing good Bourbon, but you can manage the process more efficiently. They’ve even taken things a step further and have created an app for aficionados to follow along in the process. Talk about crafted and curated for individual tastes and transparency. It may seem almost self-explanatory to note how other artisans are using technology. But what about distilleries? What are they doing? They’re creating efficiency by: Adding IoT sensors for Data Analytics collection Adding RFID tags to their barrels Creating experimental ageing warehouses (AR, anyone?) to refine their craft. Don’t worry, though. These changes won’t affect the spirit itself. After all, according to Mr. Wheatley, Master Distiller, “There’s no way to cheat mother nature or father time.” Ultimately, the idea is to not only understand the history behind the process, but to make it more efficient and repeatable. A way to preserve the processes of the past while using the advances of the present with an eye to the future. If you’re interested in using Data & Analytics to drive creativity, we may have a role for you. Take a look at our latest opportunities or get in touch with one of our expect consultants to find out more. 

How Will New Financial Risk Regulations Affect European Banks?

How Will New Financial Risk Regulations Affect European Banks?

The financial crisis of 2007-2008 changed banking. The world moved from taking mortgage loans in our dogs’ names to introducing strict regulations for banks prohibiting them from giving out loans to “anyone” without assessing Risk properly. In 2010 the Basel Committee on Banking Supervision (BCBS) introduced BASEL III, a regulatory framework that builds on BASEL I, and BASEL II. This framework changed how banks and financial institutions asses risk. It introduced an Advanced Internal Rate Based Approach (Commonly known as the AIRB approach).  Now, the committee has introduced new changes and, by 2022, all banks and institutions will have to implement the revised IRB Framework, as well as new revised regulations for the standardised approach, CVA Framework and new frameworks for Operational Risk and Market Risk. So, what does this mean for those working Risk? Change Is Coming Change is inevitable, no matter what you do. If you work in Risk Management and Compliance, change is something you can expect to happen, often. As mentioned above, by 2022 there will be lots of changes. The Basel Committee calls this initiative the “finalised reforms”, or BASEL IV which builds on the current regulatory framework BASEL III. Quickly summarised, the changes limit the reduction in capital that effect banks IRB models.  This change is predicted to impact banks in Sweden and Denmark the most, with estimations that capital ratio will fall by 2.5-3%, far higher than the 0.9% expected for the average European bank.  So what does all this mean for Swedish and Danish banks?  What’s Happening Now? One of the main things that Swedish and Danish banks need to revise for these new regulations, are their internal models. The new regulations introduced a new definition of Probability of Default, measured through a model commonly known as a PD model. Effectively this means that every bank must “re-develop” their internal PD Models in the IRB approach. Consequently, we are already seeing a clear response from the banks in their strategies moving forward. It has already become quite apparent that many banks are looking to make IRB model development their focus for 2019-2020 and 2021. This has resulted in a boom in the hiring space for developers with experience in IRB Modelling and Credit Risk Modelling in general, which in turn has led to high demand in the face of the low supply of these types of candidates. Understandably aware of this, modellers are now looking to negotiate higher salaries.  What You Can Do  For candidates that hold the right experience, there are good opportunities at hand. If so inclined, they can utilise this chance to finally see if the grass actually is greener on the other side, or not. However, there are a couple of things worth considering before making a move.   Firstly, are you actually keen on switching jobs? Your skills are probably equally in demand at your current employer and, if you are having doubts about moving from the get-go, you may well be able to negotiate a rise without pursuing a new opportunity. However, if you are serious about finding something new, this is a great time to do so. The majority of banks have found that these new regulations are creating an unsustainable workload,  and are now looking for talent externally to expand their teams. This means that the experienced modeller can pretty much have their pick of the litter.  Furthermore, if you are a junior modeller, there are now plenty of opportunities for you to enter a niche area known for being exciting and innovative. So, wherever you are in your career, these regulatory changes  are likely to have a large impact and open up new avenues for you to explore.   We all know that regulations in banking and finance are now essential, we all agree, even if they can be a little frustrating. However, what people often fail to think of are the opportunities new regulatory requirements create. In the case of BASEL IV, we’re already seeing an increase in demand for strong talent, and a demand for people who are passionate about Risk Management and model development.  For businesses, new regulations also provide the chance to not only improve their teams, but to  create new models that can be utilised to optimise and automate. A lot of financial institutions are already aware of this and are using these models to gain competitive advantage over their competitors, as well as to stay one hundred percent compliant.  If you’re looking to build out you Risk Management team or take on a new Risk opportunity for yourself, we may be able to help. Take a look at our latest opportunities or get in touch with one of our expert consultants to find out more. 

RELATED Jobs

Salary

£50000 - £65000 per annum

Location

London

Description

This role involves working with the most established media agency in the UK

Salary

£600 - £650 per day

Location

Greater London

Description

Hi all, I'm currently recruiting for a Solutions Architect who designing and implementing solutions on Microsoft Azure

Salary

£30000 - £45000 per annum + competitive bonus + benefits

Location

London

Description

A great opportunity to join an exciting and ambitious credit card company as the Lead Analyst on Application Fraud.

Salary

£80000 - £95000 per annum + competitive benefits package

Location

London

Description

A leading consultancy are seeking an experienced Forensic Analytics Director to oversee a team responsible for high volume transaction monitoring.

recently viewed jobs