Inflation has been top of mind for everyone in recent months. In February, the United States experienced its lowest rate of annual consumer price index (CPI) inflation since October 2021. However, food prices are still up 9.5% year-over-year. This volatile pricing landscape has made it difficult for shoppers and retailers alike.
Converging factors like inflation, increased market competition and changing customer behavior are causing retailers to struggle to strike the right pricing balance across their assortments. This is where artificial intelligence comes into play.
With AI-driven dynamic pricing solutions, you as a retailer can rely on this smart technology to analyze confounding market factors and recommend the right price for the shopper's budget and your bottom line.
Let's dive into how dynamic pricing works and the benefits of the AI-driven tool.
How Does Dynamic Pricing Work?
Dynamic pricing takes an automated approach to pricing strategy by automatically calculating how key variables impact supply and demand. Solutions like GK AIR Dynamic Pricing rely on AI and intelligent algorithms to review historical data, inventory, transactional data, company sales goals, seasonal trends and more to recommend the optimal price. Once that price has been identified, you can manually change in-store price tickets, or connect the solution to electronic shelf labels (ESLs) to automatically show customers the latest price.
What's more, GK AIR Dynamic Pricing provides simulations that showcase the impact of different market scenarios on pricing and the bottom line. This empowers retailers to set parameters on the solution and identify when human intervention is recommended.
Why should I implement dynamic pricing?
Your customers want the best price – and you want to ensure profitability. GK AIR Dynamic Pricing optimizes this balance, reducing markdowns, preventing out-of-stock situations and minimizing category management workload. This solution also achieves process efficiencies across touchpoints, reducing errors and unnecessary costs.
Furthermore, dynamic pricing is an excellent resource for businesses that sell seasonal items like winter coats or swimsuits. GK AIR can find the right price to enhance sell-through without relying on an overabundance of promotions.
Despite these clear benefits, dynamic pricing is often misunderstood. Some retailers believe common dynamic pricing myths like, "prices will change too frequently and customers will notice." But the reality is, situations like these only occur when a retailer doesn't have control over the solution. If you want to limit price changes to twice a week, GK AIR (as well as other dynamic pricing solutions) can be configured to do so.
Just like any technology, you must thoroughly understand the power of the solution and determine the best partner and strategy for implementing the tool. In today's market, this enhanced understanding of pricing is a key factor in ongoing profitability and customer loyalty.
Why Should I Choose GK AIR for My Dynamic Pricing Needs?
GK is a world-renowned leader in the point-of-sale industry and has received strong recognition of its pricing solutions.
Most recently, GK was ranked a "Major Player" in the IDC MarketScape: Worldwide Retail Price Optimization Solutions 2023 Vendor Assessment (Doc #US49458922, March 2023). This report analyzes a vendor's position in a category, like pricing, by interviewing brands that have used the vendor, reviewing survey scores and evaluating input from a board of IDC experts in each market. This report showcases GK's innovative approach to pricing and its longevity in the retail space – two characteristics that make GK a strong partner if you're looking to implement dynamic pricing.
Ace Your Pricing Strategy With GK
Want to learn more about dynamic pricing and how it can increase your profits and reduce markdowns? Reach out to us today to schedule a conversation.
