Price war – The frantic pace of price changes | KnowTechie

Retail, whether online or at a physical store, is becoming increasingly competitive. Online stores forced traditional retailers to lower prices to stay competitive. Now, many brick & mortar chains are using the same pricing technology as online retailers and the price war is becoming a vicious cycle.

The Increasing Frequency of Price Changes

Online and offline, there is a constant price war among retailers to attract customers with the best possible prices. However, this competitive price strategy can have a detrimental effect on profit margins, as prices are lowered frequently to match the competition.

Retail Business and Dynamic Pricing

Ever since Amazon opened up the online commerce arena and began to offer products at lower prices than their competitors, other retailers have been feeling the impact. As more and more retail businesses went online, they began to try and match prices with Amazon.

This has resulted in frequent price changes on Amazon and other online retailers even within a single day. These businesses use automated pricing systems that constantly monitor the pricing strategies of their rivals and adjust prices accordingly.

Intelligence Node, a price intelligence firm that studies retail pricing trends, found that retailers like Amazon and Walmart go into fierce competition on pricing during holiday weekends like Thanksgiving. The pace of change becomes frenetic as they try to beat each other, even by just a few cents. This fierce competition is fueled by the need to show up at the top in price comparison searches for specific items, and to attract customers who often check out prices in different stores using their mobiles. The product categories with the most volatile pricing are generally consumer electronics and computers and peripherals, like cameras, TV, refrigerator, printers, game consoles, headphones, etc.

For instance, just before Thanksgiving (and this was way back in 2012), the price for a Nintendo game on Amazon was $29.17, while the prices on Walmart and Target were higher. Then, Walmart changed the price and Amazon responded and so the prices on these to stores kept changing several times as each tried to price match or even offer it at a lower price.

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Price war – The frantic pace of price changes.