retail news in context, analysis with attitude

The New York Times this morning reports on how retailers are personalizing customer offers, but also have the ability "to adjust prices based on shoppers’ habits."

According to the story, "grocers like Safeway and Kroger are going one step further, each offering differing methods to determine individualized prices. Hoping to improve razor-thin profit margins, they are creating specific offers and prices, based on shoppers’ behaviors, that could encourage them to spend more: a bigger box of Tide and bologna if the retailer’s data suggests a shopper has a large family, for example (and expensive bologna if the data indicates the shopper is not greatly price-conscious).

"The pricing model is expected to extend to other grocery chains — and over time could displace standardized price tags. Even though the use of personal shopping data might raise privacy concerns among some consumers, retailers are counting on most people accepting the trade-off if it means they get a better price for a product they want."

The story suggests that "retailers say the groundwork has been laid with individualized coupons, which are resoundingly popular. Sites like Amazon have also made consumers comfortable with custom offers and varying pricing, they say."
KC's View:
It has always been my impression from talking to retailers that the real problem isn;t offering customized prices to certain customers, but refusing to give those same prices to other (less deserving) people who ask for them. People can get ticked off when they find out they paid more for something than their neighbor.

For customized pricing to work, just like any legitimate loyalty program (as opposed to the glorified coupon programs that are most loyalty schemes), retailers have to have the courage of their convictions.