With another holiday shopping season careening toward its end, lessons abound for shoppers and retailers alike. At Revenue Analytics, we conducted our own analysis of holiday pricing data, undertaken last year, which provides several helpful insights:
- Consumers should buy when the price is right, as it could change tomorrow;
- Shoppers getting the best prices have shifted their mindset and are now starting to think more like they do when buying plane tickets;
- The more popular the item, the more dynamically it is priced. As in, the price changes frequently, particularly online.
Our study of 2014 holiday pricing – conducted across a number of big box and online retailers with significant consumer electronics assortments – revealed just how dynamic holiday pricing has become. For example, in an analysis of 15 key consumer electronics categories, Amazon averaged over 13,000 price changes per day during the holidays last year.
Brick and mortar retailers are also getting more dynamic in holiday pricing, though they change prices less frequently than Amazon. So, for those same 15 categories, the big box retailers we tracked averaged a little over 6,000 price changes per day.
Black Friday discounts remain good deals, although Amazon often passes on matching those deep discounts. For example, on a Haier compact refrigerator, a big retailer offered a 40 percent Black Friday discount, while Amazon held prices steady.
Our study also showed that digital cameras are a particularly dynamic and competitive category. The price of one Nikon compact digital camera changed once every five days on average over the holidays, with Amazon and two big retailers matching each pricing action.
At Wal-Mart, holiday price changes are as ubiquitous as its stores. Our study identified items in TVs, home appliances and tablet accessories where Wal-Mart changed prices over 30 times in the 48-day holiday period.
The lessons in the data aren’t only for consumers. For big box retailers, the key takeaway is that to remain competitive with pricing – particularly during the frenetic holiday shopping season – they must continue to leverage predictive analytics with big data and cutting-edge Revenue Management capabilities to drive organic revenue growth.
Many thanks to Skylab Gupta, Senior Consultant in our Operations Research group for conducting the analysis for this blog post.