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Top Predictions For AI, Big Data, Pricing By 2025 | Retail TouchPoints

Prediction #1: AI will emerge as your new shopper.

The advent of digitalization has resulted in the explosion of data available to retailers — from detailed store and online transaction logs to competitive pricing data. Companies will have more data than they have traditionally been able to handle. This is the perfect storm for Artificial Intelligence-based technologies, because the more data you feed AI, the better results it will generate. That means that AI is not only going to evaluate SELECT options — it will do what it does best — it will evaluate EVERY option.

Consumers will also have fingertip access to this data. AI will match variables like consumer preferences, location and shopping history to the stores’ product offerings. AI is going to promote price transparency. Price elasticities will go through the roof. Your old heuristic pricing rules will no longer work. Small pricing mistakes will have huge costs. Retailers will begin to differentiate themselves like hedge funds with high-speed pricing models and proprietary market data.

Prediction #2: Pricing will be personal.

The industry has gone from cost-plus pricing to a dynamically generated model based on many factors like local demand and assortment. The next wave is for retailers to use algorithmic retailing — using advanced analytics to offer personalized pricing. Every customer will be offered pricing that is unique to her. It will be based on many factors that the newest digital capabilities have enabled. Geolocation, for example, can alert a customer to a promo that is available when she is close to her favorite store. This setup not only benefits retailers, it also presents convenience and an opportunity to the consumer to take advantage of savings she would otherwise have missed if she didn’t have access to this information.

At first, personalized discounts will be used to fly under the radar in a price-transparent world. Retailers could bring in customers without lowering prices as a reaction to their competition. Personalized pricing will be embraced as retailers realize its power — to get every price right at every transaction.

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Top Predictions For AI, Big Data, Pricing By 2025 – Retail TouchPoints.

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