Don't like the price you're seeing on a coffee maker or a toothbrush? Try waiting five minutes.
That lesson is starting to dawn on consumers as retailers embrace technologies that allow them to make rapid-fire price changes on an hourly or even minute-by-minute basis.
Consumers are accustomed to rapid price fluctuations in the online world, used by sophisticated e-commerce retailers like Amazon, but bricks-and-mortar retailers are embracing technologies that crawl the web for product prices and make adjustments on the fly both online and in stores for things like consumer electronics, power tools, and even consumer packaged goods.
Pricing data indicates retailers accelerated their use of those technologies over the 2012 holiday season -- and they're likely to be the norm in 2013. "Holidays are a catalyst for the tech and the new initiatives, the new pushes, and they sort of stay there," said said Kristopher Kubicki, founder and chief architect at retail data firm Dynamite Data.
Price data gatherers say Amazon is the king of intra-day price fluctuations, but other large and smaller merchants are doing it, too. Sears led the charge between November 1 and December 10, 2012, shifting nearly 24% of its online prices on select products daily, up from 10% in 2011, according to Dynamite Data research featured in a Bain and Company report. Amazon changed 20% of prices on those products in 2012 and 12% the previous year. Kmart adjusted almost 15% of the select product prices in 2012 -- up from 3% in 2011.
Toys "R" Us, Best Buy, Home Depot, Staples, Office Depot and Lowe's all changed 5% or more of their prices on the products studied during the 2012 holiday season, according to the report.
The price-data sector is heating up. The Home Depot acquired pricing-data firm Black Locus in December to enrich its competitive pricing efforts. In addition, IBM is now partnering with pricing intelligence company 360pi to supplement data used for its retail analytics services.
"In Q4 of last year we on-boarded more customers than we did from Q1 to Q3 combined," said Pierce Ujjainwalla, marketing team lead at 360pi. The firm started as a price comparison shopping engine but shifted to focus on its b-to-b price monitoring service about a year ago. Like Dynamite Data, 360pi extracts data from e-commerce sites throughout the day, sometimes on an hourly basis.
The pricing data services trend started with electronics, where specific model numbers and SKUs are standard features on product pages. "That's where the data is clean," said Dynamite Data CEO Diana Schulz.
However, there are applications for other markets such as appliances, office tools and auto. CPG sellers are also showing an interest in pricing data. After all, said Mr. Kubicki, CPG products are "why the barcode was invented." Merchants selling consumer packaged goods are starting to add barcodes to online product pages, though the practice is "still in its infancy," he said. Still, he suggested, the CPG industry is research-rich. "Most of these companies are already big data companies."
While the internet is enabling the data collection, it's having a big impact on in-store prices and shopping behavior. Retailers are investing in pricing data services to optimize pricing online and in their physical locations, and to fight showrooming -- when shoppers peruse bricks and mortar store goods but then purchase online.
On the sales floor
Abt Electronics, a Chicago-area seller of electronics, furniture and luggage and kitchen accessories, works with Dynamite Data to feed competitive pricing information straight to its salespeople on the floor who use it to negotiate sales, said Mr. Kubicki. Another bricks-and-mortar furniture store plugs Dynamite's data into its own algorithms to update prices shown in LED displays each day, he added.
360pi also offers a tool that helps in the physical realm. Its mobile software is used by secret shoppers who capture pricing data for retail clients when they visit rival stores, said Mr. Ujjainwalla.
While the physical and digital shopping worlds are aligning, the logistical challenges involved in updating prices at bricks and mortar locations prevent some merchants from doing so as frequently as they might like. Even Walmart changes prices just once each day, according to Dynamite's research. "Bricks and mortar still kind of supersedes everything," said Mr. Kubicki.
It's not just about price optimization, though. Pricing data firms are also helping search marketers become more sophisticated about when to bid on search terms and when it's best to to sit back and wait. For instance, digital marketing firm Rise Interactive uses 360pi data to help e-commerce clients, said Mr. Ujjainwalla. When the data shows their products are priced higher than the competition, they can set up rules that prevent their ads for that product from running. Because companies have to pay if someone clicks on a search ad, they may choose not to run the ad at all if a consumer is likely to buy the product for less elsewhere.
Retailers have also used Dynamite Data to inform search campaigns. When the data suggest a competitor is out of stock on an item, merchants may act on that information by reducing their search keyword bids, said Mr. Kubicki.