Over the years, there have been many factors that have impacted and ultimately shaped the way we do our weekly food shop. Gone are the days of walking down a local high street visiting the butcher, fishmonger, and greengrocer. Supermarkets changed all of that. And have continued to change the way we shop since their emergence.
The next big change that supermarkets are bringing in is dynamic pricing. It is something that has been seen with online stores, but it is now coming to physical stores that dominate many people’s food shopping experience.
A huge influence in being able to change the way supermarkets are pricing in their stores is the introduction of electronic shelf labels, or ESLs. ESLs display the price of products on a small electronic screen, instead of paper labels we see in UK supermarkets. These electronic pricing labels have been present in European stores for several years, but had failed to catch on in the UK market.
However, this is starting to change, with Andrew Cark, CEO of Displaydata, believing there is a “real momentum behind ESLs”. The ESLs allow retailers far more control in an efficient way over prices and promotions, allowing pricing to change as quickly as prices change online.
This is also a change that has been seen in America, where companies have taken it a step further. Coca-Cola has used Google’s cloud platform, allowing them to send personalised discount offers to the phones of customers as they browse in the supermarket.
Just how with booking flights online, these offers can be unique to the person receiving them. Greg Chambers, global group director of digital innovation for Coca-Cola, said the information they use to generate these individualised coupons allows Coca-Cola to “understand who the consumer is and get the right content and messaging to him or her at the right time”.
But how is dynamic pricing crossing the waters into the UK market? Well, leading supermarket brands, including Marks and Spencers, Tesco and Morrisons, have introduced elements of dynamic pricing into their pricing strategy.
Marks and Spencer trialled making their sandwiches cheaper in the morning in an attempt to entice customers to buy then, and ease the rush come lunchtime. While Sainsbury’s ran an electronic pricing trial, but are yet to roll it out full time and across all stores.
However, it is a look to the future. Dynamic pricing and ESLs allow supermarkets increased control over their prices, being able to react instantaneously to changes in retail and their customers.
People may not be too keen on dynamic pricing moving beyond the eCommerce world, but one true positive that can be brought about by dynamic pricing in supermarkets is the reduce of waste.
This is already being seen across the pond, and promises to save one billion dollars which is lost with wasted food. In America, 133 billion pounds of food is wasted every year. Wasteless works with ELSs and dynamic pricing to monitor the different expiry dates, and allowing food nearing its time of expiration to be sold for cheaper.
On a smaller scale, this has been mirrored in some London food shops, including Spar stores in Walthamstow and Hackney.The stores are trialling dynamic pricing, with a focus on bread. So far, they have seen a rise in their profits by 2.5%, but also seen a reduction of wasted food by 30%.
There are definite benefits with using dynamic pricing in supermarkets, with chief executive of Market Hub, Roy Horgan, believing it will benefit both the retailer and the consumer as the right price will be created.
Supermarkets are demonstrating that the traditional retail experience could slowly, and perhaps with some nervousness, be moving towards reflecting the more common and modern buying experiences their consumers partake in every single day.
While dynamic pricing in supermarkets is not going to be everywhere overnight, it is coming and we are more prepared for it than we may think.