With pricing and promotions becoming more critical in today's market, a new report from RELEX Solutions and Incisiv provides an in-depth look into the current state of pricing and promotions in the retail sector across the U.S., U.K., France, and Germany. The study highlights the increasing importance of strategic pricing and promotional strategies as both retailers and shoppers navigate an economically challenging landscape.
The report, based on a survey of 179 retail executives, underscores the growing pressure on retailers to adapt to heightened price sensitivity among consumers. Findings indicate that 93% of shoppers now demand more value from their spending, with 84% stating that price is a crucial factor in their purchasing decisions. In response 87% of retailers used more aggressive discounting strategies to maintain sales volumes and customer loyalty.
"Consumers today are more aware of and motivated by prices than ever before. Retailers must evolve their pricing strategies to not only respond to this demand but to lead with tools that are faster, smarter, and more integrated across their entire operation," says Jeff Bulger, strategic principal, RELEX Solutions. "Effective pricing is no longer just an option—it's a critical driver of both customer loyalty and profitability in today's retail landscape."
Key Takeaways:
- With economic uncertainty, rising inflation, and shifts in shopper behavior, promotions became an essential tool for retailers to attract and retain shoppers in 2023. 87% of retailers anticipate maintaining or increasing promotional efforts in 2024.
- Only a small percentage of retailers are using advanced, data-driven approaches (real-time data, advanced algorithms, and AI) to power their pricing and promotions. The lack of adoption impacts retailer agility in responding to market changes and changes in shopper behavior.
- Without accurate, unified data, retailers cannot effectively optimize their promotional strategies. Cultural resistance is the #2 challenge in improving maturity.
- Retailers are using spreadsheets and legacy systems to drive execution, which lack the agility and integration needed to respond to changing market dynamics with speed and precision,
- The study emphasizes the need for retailers to break down silos and integrate their pricing and promotional capabilities. Unifying pricing and promotions and moving to an effective technology stack, the report estimates that retailers could achieve an additional $450 billion in incremental sales.