Retailers Misreading Price Sensitivity Face Risks, Fewer Rewards

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In retail, it’s considered bad if a consumer sees a product he or she likes in the store, only to experience sticker shock when they look at the price tag. But that’s exactly what happens when prices aren’t in line with what the customer anticipates. Those expectations, however, are a moving target.

Often, the changes to consumer price sensitivity fluctuate as key demographics move into different stages of their lives or, conversely, when new generations move into a retailer’s target life stage with a different mindset from those that proceeded them. Add with the Internet and price transparency, and it’s possible that shoppers’ idea of what they’d pay for a specific garment could be far out of whack from how retailers are setting their prices.

The result? A glut of overstock on one end of the spectrum, or missed margins on the other.

Read the Full Article at Sourcing Journal

retail  dynamic pricing  Reduce Markdowns  Featured Pricing  price elasticity