OnDemand WTP Pricing Research

Surge pricing comes to the supermarket | The Guardian

It also perhaps has the potential to offer a glimmer of hope for the beleaguered high street. Shops are all too aware of the habit of “showrooming”, by which customers look at products in stores before going home and browsing the best deals for them online. Electronic price-tag systems can not only track online prices, they can – and sometimes do – also display at point of sale the hidden cost of shipping if the same product was bought online – a cost that most online customers don’t factor in. “There is a way for [high street] retailers to become profitable again,” Horgan insists.

So far, such systems have not entered the murkier waters of using the data to offer different customers different prices for the same product at the same moment. A couple of years ago B&Q tested electronic price tags that display an item’s price based on who was looking at it, using data gathered from the customer’s mobile phone, in the hope, the store insisted, “of rewarding regular customers with discounts and special offers” – rather than identifying who might pay top price for a product based on their purchasing history.

That trial hasn’t become a widespread practice, although with the advent of electronic systems and the greater possibilities of using your phone apps as a means of payment, it is probably only a matter of time. Should such pricing policies alarm us? The problem, as with all data-based solutions, is that we don’t know – no one knows – exactly which “consumer bucket” we have been put in and precisely why. In 2012, a Wall Street Journal investigation discovered that online companies including the office-supply store Staples and the furniture retailer Home Depot showed customers different prices based on “a range of characteristics that could be discovered about the user”. How far, for example, a customer was from a bricks-and-mortar store was factored in for weighty items; customers in locations with a higher average income – and perhaps more buying choice – were generally shown lower prices. Another study, in Spain, showed that the price of the headphones Google recommends to you in its ads correlated with how budget-conscious your web history showed you to be.

Increasingly, there is no such thing as a fixed price from which sale items deviate. Following a series of court judgments against other retailers advertising bogus sale prices, Amazon has tended to drop most mentions of “list price” or recommended retail price, and use instead the reference point of its own past prices.

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Surge pricing comes to the supermarket | Technology | The Guardian.