1 in 5 UK retailers think pricing strategy is unimportant
Pricing may be more important than ever before, but in the United Kingdom, many retailers underestimate the importance of price and simply don’t monitor prices at all. And when they do, they are spending too much time on this.
This can be concluded from research done by Omnia Retail. The company surveyed 150 retailers (34% pure players, 43% omnichannel and 23% bricks and mortar) across the United Kingdom to ask them about whether and how they automate pricing. Almost all retailers said they have a pricing strategy in place, but only 43 percent see it as important. Over one in five (27 percent) would even describe it as ‘very important’. But a further 20 percent of UK retailers see their pricing strategy as (very) unimportant.
‘A concerning figure’
Omnia Retail describes this figure as concerning. “It’s estimated that there are almost 200,000 registered retailers in the UK, so our figures suggest that huge numbers of these are either investing in a strategy that doesn’t work or not dedicating enough time to pricing in order to maximize its potential.”
‘Retailers spend too much time to competitor price checking’
An important part of pricing is checking the competitors’ prices. Omnia Retails says that British retailers are committing far too much resource to competitor price checking. “On average, they spend 10 hours per week doing this, which suggest that they aren’t doing this efficiently.” Over half of retailers say they spend 1-10 hours to monitoring market pricing, with a quarter saying they commit 11 to 25 hours per week to this practice.
One in ten brands even spend between 26 and 50 hours doing this; the equivalent of one full-time salary. “This leads to a huge amount of wasted time across the entire sector. If retailers could automate competitor price checking, the process would require almost no time or resource to manage.”
3 percent never alter their prices
Retailers may check prices, but this doesn’t automatically mean they do something with this information. As a matter of fact, 3 percent of retailers say they never alter their product prices, while a quarter only change their price about once or twice a year. And a third only do it sometimes or several times annually, the research shows.
There are several reasons to alter your product prices. A popular one is because your competitor are doing it or because they simply offer the same products for a much lower price. Almost half of retailers surveyed say they base their pricing on that of their competitors. Another 41 percent alter their prices based on the season. For example, they heavily discount their festive products immediately after Christmas.
Taking the weather into account
And about one in four retailer take the weather into account when changing the prices. “An unexpected hot spell, for example, may limit the availability of fans or cooling systems, so brands could choose to take advantage of this demand and increase the price of these items to boost margins”, Omnia Retail writes.