The National Retail Federation (NRF) reported that sales were 8.3% higher in 2020 than over the same period in 2019.
“Despite unprecedented challenges, consumers and retailers demonstrated incredible resilience this holiday season,” NRF President and CEO Matthew Shay said. “Faced with rising transmission of the virus, state restrictions on retailers and heightened political and economic uncertainty, consumers chose to spend on gifts that lifted the spirits of their families and friends and provided a sense of normalcy given the challenging year.”
Yet, despite the bullish numbers, it’s easy to wonder if they could have been better. Only 15% of retail stores are using dynamic pricing tools. The AI-based tools, which factor in competitor prices, consumer spending history, and inventory levels, are proven to increase profitability by up to 10%. Which should leave retailers wondering, did they leave too much money on the table?
Looking Ahead to 2021
There are some big changes coming to retail between now and November, when the holiday shopping season starts. Physical stores are embracing electronic shopping labels (ESL), or digital price tags. These price tags provide a number of benefits to retailers, as they improve the customer experience.
ESLs should be a gamechanger for physical stores that want to embrace dynamic pricing. Rather than needing to physically change price tags on thousands of items or limiting their dynamic marketing efforts to the top selling products on the sales floor, ESLs allow retailers to adjust prices in store as needed.
As physical stores increase their digital footprint, they gain the flexibility to match their online competition, especially in areas of competitive pricing. When competitors raise or lower prices on their websites, stores can match them, and claim sales that might have been otherwise lost.
According to MarketWatch, ESLs are expected to jump from $478 million dollar market in 2018 to a $1.5 billion dollar market by 2023. Those numbers indicate that a lot of retailers will be adding digital pricing to their physical stores over the next three years. For retailers looking to stay competitive, they will need to introduce digital price tags to their stores, and with it, dynamic pricing tools that will allow them to maximize profit on their sales.
Get a Jump on 2021 Holiday Sales
Most retailers probably feel that they dodged a bullet in 2020. No one knew what to expect from holiday shoppers that had been living under economic uncertainty ever since the pandemic reared its head back in March. The fact that sales were strong was a welcome relief.
However, as retailers look ahead to 2021, they should be able to sense the competition heating up, especially over price. Those who want to get ahead need to start investing in ESLs and dynamic pricing during Q1 and Q2 of 2021, as they prepare for a battle over every sale at the close of this year.