The back-to-school numbers look very good for embattled retailers, but make no mistake, shoppers are likely to defer purchase decisions until they are absolutely certain that they have the best deal.
Ottawa, Canada (PRWEB) July 21, 2014
The kids are still on summer vacation, but retailers are already headed “back-to-school.” After a lackluster 2013 holiday shopping season, retailers are anxiously awaiting for the second heaviest shopping period to arrive as the back-to-school season is typically a key indicator of upcoming holiday and winter sales. Early forecasts from the NRF suggest that shoppers will open their wallets a little more in 2014 for key back-to-school categories, but also warns that consumers are likely to be more price-sensitive than ever.
According to 360pi, a leading provider of competitive price intelligence, intense price competition during the back-to-school season is nothing new, however, today’s competition is first and fiercest online, affecting pricing across all channels. How can retailers guarantee their pricing strategies will be the top of the class in 2014?
360pi shares a summary of best practices for competitive pricing and assortment:
- Focus on the core back-to-school categories. Items such as apparel, accessories, electronics and school supplies are where retailers need to be most price-competitive. For mass merchandisers, it is critical to look for opportunities to add to the overall basket-of-goods with higher margin items such as bundling back-to-school products together for different grades and age groups.
- Look back at what direct competitors did and when. Retailers can assume that pricing tactics and strategies that were successful last year will be applied again this season. Taking a look back to 2013 back-to-school printer pricing for a select group of retailers including Amazon, Best Buy, Walmart, and Target, approximately half held their prices relatively constant (i.e. within 5%) in the three weeks leading up to Labor Day, while the other half raised them. No real shopper bargains were to be found until one full week post Labor Day. We expect this pattern to repeat across categories in 2014, so apply back-to-school discounts sparingly to avoid giving up margin unnecessarily.
- Understand regional markets. Retailers should avoid pricing to an artificial national average. School calendars differ by grade, region and local school districts, so it is important for retailers to align pricing and promotions to local market dynamics.
- Optimize back-to-school assortments. While there will always be a select few coveted items that all students must have, retailers need to search for opportunities to optimize their assortments to minimize competitive overlap in back-to-school categories. Retailers should also look for opportunities to leverage private-label goods, especially for school accessories and supplies.
- Leverage loyalty programs and personalized promotions. In order to avoid individual price matches, retailers need to reassure cost-conscious shoppers and get them to convert. The Walmart’s Savings Catcher program is an excellent example of how retailers can convince in-store customers that they do indeed offer the lowest price overall. The Walmart strategy eliminates the need and hassle for shoppers to conduct individual product price checking and in-store matching.
- Offer digital coupons for today’s on-the-go shoppers. Comscore reports that mobile coupon usage is up 41% in the past year, with females aged 18 to 44 more likely than average to take advantage of these deals. This is also the sweet spot of the back-to-school shopper demographic, so retailers should include digital coupons in both competitive monitoring and the promotional mix.
- Arm customer-facing employees with real-time competitive intelligence. Retail in-store and call center associates are likely going to be with prospective customers at the point of conversion, so ensure they have ready access to up-to-the-minute competitive pricing, product availability and shipping terms.
“The back-to-school numbers look very good for embattled retailers, but make no mistake, shoppers are likely to defer purchase decisions until they are absolutely certain that they have the best deal,” said Jenn Markey, VP of Marketing for 360pi. “Having the right products at the right place in the right time is critical to back-to-school success. Passing the competitive intelligence exam is a retailer’s key for a prosperous school year.”
360pi derives profitable insights from product and pricing big data to help leading omnichannel retailers, e-tailers, and manufacturers compete and win in a price transparent world. 360pi's customer base accounts for over $US100 billion in annual retail sales and includes Ace Hardware, Build.com, Overstock.com, and RIS Fusion award-winner Best Buy Canada. 360pi monitors millions of products with unprecedented accuracy to give retailers and manufacturers real-time visibility into the market with full awareness of the competitive pricing landscape to "right price" for their respective customers. Ultimately, 360pi helps customers make smarter pricing decisions to drive increased revenues and margins.