Dynamic pricing – Why airlines are different from stores

There is a big difference between airlines and retail stores. Shoppers will put up with constantly changing prices for airlines...

PriceChanges_504x309There is a big difference between airlines and retail stores. Shoppers will put up with constantly changing prices for airlines because they understand the finite capacity of aeroplanes or even hotels. However, in shopper’s minds the availability of products in stores is pretty much unlimited. This means that for many products they will see no justification for constantly changing prices. Dynamic pricing across the whole store will also make it very hard for them to compare prices between retailers. This will lead to shopper distrust and no doubt some unintended consequences.

Knowing when to use technology

There is a role for electronic shelf labels and dynamic pricing in selected areas of stores such as fresh food so that prices can be marked down gradually during the day to optimise clearing stock and retailer profitability. Changing prices in response to competitors is also good but let’s not get too carried away with what can be done with technology to help retailers at the expense of what actually helps customers make buying decisions.

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