Cashier-less payment may be a turn off
Survey question to consumers: I would prefer to shop at a retail store that offered ‘cashier-less’ payment options.
Source: Retail Economics/CMS, 2019
Dynamic pricing
AI opens up the possibility for real-time and personalised price changes, with the advantage of more competitive pricing and better deals. Our research found that 37.2% of customers would favour a brand who offered them personalised dynamic pricing if they thought it would lead to more competitive prices, compared with 24% who prefer fixed prices.
Dynamic pricing is appealing to consumers
Survey question to consumers: I would prefer to shop with a retailer who offered me ‘personalised dynamic pricing’ (e.g. ‘unfixed’, like flight costs) if I thought it would lead to more competitive prices.
Source: Retail Economics/CMS, 2019
Over the decades, a key focus for retailers has been how to effectively price their goods to win sales. With consumers having easier access to price comparisons, this has become even more important.
Dynamic pricing is not a new concept, but thanks to AI, it can be more sophisticated and nuanced, responding not only to stock levels or demand patterns, but to an individual’s unique profile, habits and needs. The benefits are huge and can lead to improved sales conversion, optimisation of margins and an ability to react to changes in market trends.
Albeit, customers could be frustrated by price changes and see it as price discrimination. In the worst case, customers may feel retailers are misusing their data to devise price discrimination strategies, and it could lead to a loss of trust.
The difference in outlook between consumers and retailers is obvious, with over half of retailers and consumer brand companies surveyed believing customers would prefer real-time, personalised price changes if it led to a more competitive market, while only 37% of consumers agreed.
“Over half of retailers and consumer brand companies believe that customers would prefer real-time, personalised price changes”
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This insight article forms part of a thought leadership report entitled “Disruption 2.0 – Here we go again: AI in Consumer and Retail”. It was produced by Retail Economics in partnership with CMS and looks at consumers across all age groups in the UK and explores their attitudes regarding AI technologies they currently interact with, and the cutting-edge applications emerging. To contrast this, the research also includes a business survey of senior leaders from Consumer and Retail organisations, FMCG manufacturers and fashion and luxury brands, to gauge their sentiments towards disruptive technologies and the opportunities and challenges they currently face.
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