A new report on pricing sponsored by Precima, conducted by Retail Systems Research (RSR) namely 'Pricing 2016: Life Becomes Unmanageable' reviews current pricing practices and challenges faced U.S. retailers. The report mentioned that "Consumers may be sensitive about price, but no retailer, not even the lowest-priced retailer, can win on price forever". RSR benchmarked their findings as "pricing practices simply aren't effective and the race to the bottom is claiming more victims than proclaimed winners". Means retailers competition to go for sale! sale! and sale! is not helping them in business strategy. In contrary it is affecting the mindset of the consumers as if they will only buy when there is a sale on the product. The report summarized that destructive pricing practices have made it harder for retailers to take advantage of opportunities for pricing to contribute to business success, and retailers are beginning to realize that the pricing tactics they employ are just not working.

RSR report summed up the difference between high performing retailers and low performing ones. Their differences in people, process, and technology are affecting the whole business. Endless promotion competition among retails competitors are pushing the market to place where none of the retailers are gaining. The report encourages using latest technologies that will help in market intelligence taking better decision not just digging in price strategies.

With the intensity of price competition in retail, the understanding of price-sensitive items and setting an optimal price based on analytics is critical. The RSR report cites that only 35 per cent of retailers believe their company has a strategy in place to manage prices and promotions effectively across all channels.

"Never before has there been a greater need for analytics to inform a data-driven pricing strategy," says Brian Ross, President of Precima. "Retailers are acknowledging this need for greater analytics, recognizing that to overcome the barriers of implementing effective pricing practices, they need to improve the analysis process for pricing and the integration of Software solutions that support pricing decisions and work flow."

The RSR report also reveals that 50 per cent of US retailers believe increased price sensitivity of consumers is a business challenge, citing the possibility of negative customer reaction to changes in price strategy as the most significant organizational barrier to more effective pricing practices. Interestingly, retailers recognize consumer price sensitivity as the largest business challenge while also perceive it as an obstacle to moving forward. An effective way to address this conflicting concept is with the application of well-established analytical approaches.

"Retailers with customer data have a leg-up in the market and can leverage their competitive advantage through identifying key customers and then pinpointing what is important to them and where they care about price," adds Ross. "Further, the next generation of pricing will need to incorporate competitive prices and data-defined competitive price indices to optimize price investments. The pay-off in doing this right is huge,namely incremental sales, profit and growth from loyal customers."

 Other highlights include:

• Less than half of retailers feel their company pricing strategies are building customer loyalty and only 23 percent feel the pricing strategies are effective at driving bottom line results



• Personalized pricing is the goal for many retailers however 41 percent of retailers feel that internal challenges indicate nothing drastic is likely to occur near-term until retailers implement the right approaches and processes



• 41 percent of retailers cite not enough IT resources available as being a barrier to implementing effective pricing practices, followed closely by lack of price, competitor, and purchase data at 38 per cent



• Retailers are looking to replace early competitive price intelligence solutions and plan to invest in new capabilities around promotion optimization, markdown planning, and inventory management



• Back in 2012, we began expressing serious concerns about both strategies and tactics, but retailers seemed convinced they could win the race to the bottom on price or at least, by participating in the race, they could stay in the game. Fast forward to 2016, and retailers are now starting to feel the negative impacts of their past pricing decisions" said Paul Rosenblum, Partner at RSR. "Consumers may be sensitive about price, but no retailer, not even the lowest-priced retailer, can win on price forever."