4 Competitive Pricing Drivers that Retailers Need to Monitor This Holiday Season (and Beyond)

What’s the number one driver of price changes during the holiday season?

FOMO – The fear of missing out.

In no other time does a retailer ditch their pricing strategy as quickly as than during the holidays when shoppers are actively buying and searching for value and discounts.

Ironically, after the holidays, retailers ask how their pricing strategy worked.

Prevent retailer regret. Don’t be part of the the race to the bottom. Here are 4 data drivers that you need to consider when it comes to pricing decisions for the holiday season (and beyond).

1. Availability vs. Price Discount

Your competitive pricing strategy either has you positioned as a leader or follower. As a result, when your competitor adjusts a price, you have a decision to make. Before you react, ask yourself the same question that many of your shoppers ask: Is this too good to be true?

To answer this question, you must be able to answer some other questions:

– Is the product available today?
– When is the expected delivery date?
– Is there limited availability?

More often than we’d like to admit, we see retailers drop prices when a product is out of stock, can’t meet the holiday delivery timeline, or is in limited supply to create an artificial pricing bottom.

And retailers blindly give into this profit compromising temptation.

The only way to avoid the unnecessary pricing dip is to collect frequent competitive data that cross references the product price with its availability. These data points give you visibility into whether a product is simply in stock or not – it gives you the information to answer the questions posed above.

2. Delivery Options & Pricing Impact

Especially with the common holiday shipping delays, retailers have been keen to offer different prices and even promotional incentives for different delivery timelines. (See more at: Are Delivery Options Drowning Out Price Differentiation in Ecommerce?)

To decide whether to match a competitive price, retailers need visibility into the delivery/shipping method and timeline to make sure that the competitive price is a 1:1 match. An exact match goes beyond product features and attributes – it also factors in delivery timeline.

Failure to collect and consider delivery and shipping data in your pricing decisions can leave you less competitive from both a pricing and deliverability perspective in the eyes of your shoppers.

3. Local / Regional / National Pricing

Not all pricing strategies are created the same. Our retail customers sometimes say they don’t look at pricing the same way their competition does. Whether it’s localized, store-level pricing, regional or zone pricing, or a national pricing strategy across your portfolio, there’s a benefit to seeing your competitor’s pricing at a granular level.

For example, it may not seem relevant to view store-level pricing if you cannot make store-level pricing changes. However, this local store-specific pricing may be indicative of a shift in consumer expectation that may benefit your broader strategy.

Gathering pricing data at multiple hierarchies gives you the flexibility to look at your business from a variety of perspectives to optimize your pricing portfolio across your business and at the point of purchase.

4. New & Temporary Competition

Local delivery services like GoPuff and national delivery services like Instacart and Shipt have already put additional pricing considerations in the hands of retailers. During the holiday season, shoppers will continue to rely on these providers to aid in a convenient shopping experience which means that retailers need to be sensitive to the pricing and promotional offers available.

Furthermore, seasonal product assortment creates temporary competitors that you might not monitor year-round.

Without visibility into these competitors’ price points, retailers risk costly mistakes and the inability to make a data-driven decision as to whether their pricing strategy needs to adjust to include these new/temporary competitors.

While that FOMO on potential holiday sales continues to be a significant driver of pricing decisions, expanding the influences of price changes to consider more strategic and actionable data points will allow retailers to protect their profitability and meet their customers’ needs.