The concept of pricing goods is conceptually simple but in practice, complex. Sure, there’s supply and demand, but there is also regulation and taxes, geography and cost to ship, and local demographics.
None of those factors include how you actually interact with the store, either.
We know that data has changed how online goods are priced, sold and suggested, but until recently, that capability hasn’t been deployed on a large scale in the real world.
Translation: your groceries may soon be priced according to your loyalty to that store.
The New York Times‘ Stephanie Clifford reports:
Airlines, hotels and rental cars have offered variable prices for years. Those prices, however, are almost always based on capacity and timing, or are given to groups — seniors get one discount, frequent users another.
Now grocers like Safeway and Kroger are going one step further, each offering differing methods to determine individualized prices. Hoping to improve razor-thin profit margins, they are creating specific offers and prices, based on shoppers’ behaviors, that could encourage them to spend more.
Like advertising, retailers are trying to use technology to squeeze the guesswork out of pricing and make the process more efficient. It makes plenty of sense — retailers have been collecting purchasing data for years, though generally it’s used for inventory — but the implications of such dynamism are many.
For one, it challenges a basic set of fairness consumers have about products for sale; the tactic also threatens to make actionable insights out of insignificant data. (Was that purchase really a gift for someone else, skewing my digital offers? And so on.)
Like customized advertisements, the devil is in the detail for customized offers — retailers must resist getting too intimate too fast, lest the whole thing be derailed by the creepy factor.