The COVID-19 era continues to confound and complicate every sector of the economy in every corner of the globe. A great microcosm of the complexity of the pandemic is reflected in the state on the massive online marketplaces such as Amazon.com and Walmart.com. These marketplaces are like supercharged superstores at a scale unimaginable just a few years ago, with a boggling array of assortment and a mix of direct and third-party sellers.
It’s a very mixed picture right now for retail overall, with grocery growing at rates that are challenging for grocers and shoppers alike, while in softlines inventory is piling up untouched. Online alcohol sales are surging, while furniture sales swoon. With the full line of categories, online marketplaces functionally have split personalities at the moment. At the same time, shoppers are suspicious and wary of some retailers’ pricing, as the pace of grocery price increases reaches levels not seen since 1974 while the overall economy is threatened by deflation.
But for any multichannel retailer with a varied assortment, such challenges exist to varying degrees. With shoppers going online more than ever, multichannel retailers need very targeted, competitive prices on the items shoppers pay the closest attention to in that channel, and the insights to know where they can safely recover margin elsewhere in the assortment. Meanwhile, competition is arising from nontraditional sources, with many restaurants who have perfected contactless meal pickup and delivery, adding pantry items and sundries to their available stock.
As supply chains and competitors’ prices fluctuate wildly, retailers must ensure their prices don’t go off the rails from the shoppers’ viewpoints. As supply costs rise and jacked-up prices on in-demand items appear from rogue online etailers, automated cost-based pricing or competitive price matching can lead to price changes that permanently alienate shoppers. Retailers with multiple channels need to leverage price management and science-based optimization that ensures that, while recommended prices take your rules into consideration, prices at the item level also are contributing to a carefully crafted price image.
You don’t get a second chance to keep an angry customer or regain their trust. It takes mature, science-based pricing processes to know where to avoid chasing competitor price increases and where to take the opportunity to come in lower on strategic items that win your shoppers’ hearts and loyalty. Understanding, trust, and ultimately accepting and embracing science ultimately enables retailers to thrive in their chosen markets.