Coming soon to an Amazon website near you…. J. Crew khakis, Ralph Lauren polo shirts, Lord & Taylor suits, Abercrombie & Fitch Co., Neiman Marcus Group Inc. and more! Amazon is in talks with these well-known retailers (and several others) to start offering their products on Amazon. For retailers, selling with Amazon has always been a bit of dealing with the devil… even when Amazon carries their product.
Revenues up by over 20%, stock price increased over 25% over the course of the year and yet… for two of the four quarters of 2013, Amazon posted a loss. Despite what would otherwise be a possibly alarming trend for most companies, analysts have been expecting Amazon to return to profitability and the stock price fell by less than 2%. How can it be that with an increase in sales revenue of over 20%, Amazon managed to operate at a loss? And why would repeated losses like this not have a bigger impact on their stock?
Sale! Sale! Sale! What used to be a magical word for retailers and advertising may have lost some of its oomph in today’s world of sophisticated shoppers. When it comes to moving inventory, what used to be a sure fire way of getting the attention of shoppers now requires a more technologically sophisticated approach.
2013 marked the first year that online sales topped 1 trillion dollars worldwide. Brick and mortar stores have been feeling the pinch coming from the online market for years and continued to feel those effects over 2013. However, brick and mortar stores are far from “down and out” and a recent prediction from IBM confidently states that in 5 years time, brick and mortar stores will have fought back and become better than “etailers” can ever hope to be. Their prediction is based on emerging technologies such as augmented reality becoming mainstream and a seamless fusion of big data with daily operations in brick and mortar stores leading to a richer, more personalized and more engaged experience than a typical online experience.
Looking a bit closer than five years out, we have outlined some of the top technology predictions for the overall retail market for 2014 and beyond.
The recent hacking scandal of Christmas 2013 at the massive Target Corporation has thrown many in the retail industry into a state of fear and panic. Even though it is still unclear how the data breach could have perhaps been prevented, the Public Relations disaster that followed is every retailer’s worst nightmare. The breach occurred from Nov.27 through Dec.15 and is one of the largest retailer security breaches in history.
Big data is a term that’s often used in marketing related discussions, but exactly how big is “big data” and where and how can or should it intersect your operation? Is big data limited to only marketing related activities?
To get an idea of exactly how much data is out there, consider the following, according to Monetate’s Retailer’s Guide to Big Data:
Yesterday we took a look at how pricing intelligence adoption by retailers is on the rise. We know that competitive monitoring can play a crucial role in refining your business strategy, and can be a significant advantage in the market. The more insight you have on what your competitors are doing, the better you can make adjustments to optimize your own strategy and compete intelligently.
What’s Driving the Need for Price Intelligence?
Pricing wars have arrived in a big way for retail, and it seems to have been occurring in stealth mode. According to a report by RIS, more than one-fifth of retailers say they have pricing intelligence tools and actively use them. Since most retail technology studies over the past 18 months have not included dynamic or intelligent pricing as measurable metrics (or even mentioned them), these early adopters have been operating in stealth mode to their advantage. That advantage is likely to shrink considerably over the next 12 months as an additional 30% of retailers plan to add pricing intelligence solutions.
The assumption today when it comes to shopping in general is that everyone is on the lookout for a bargain. A recent study by Parago demonstrates just how much this assumption is actually applied in principle when people are making purchases. The study found that just about 75% of shoppers identified themselves as more sensitive to price in 2013 compared to the previous year. One reason for this additional sensitivity may stem from 42% of those surveyed expressing the perception that their purchasing power has decreased over the past year. Additionally, with the widespread availability of tools that make comparison-shopping easier and faster than ever before, shoppers are empowered to act on their feelings and perceptions.
We previously discussed why dynamic pricing can be a powerful strategy for retailers to optimize revenue and profit. With the rise of pricing intelligence and repricing tools, they can now quickly and accurately reprice inventory based on repricing rules that take into account key profitability points. Let’s take a closer look at why dynamic pricing works in terms of psychological pricing – in particular, how the contrast effect plays into it.