How easyjet pricing could save retail
The B&Q giant Kingfisher is preparing to fight internet rivals with radical plans for airline-style variable pricing
Tuesday 22 October 2013
DIY can be a fine art in procrastination for many households up and down the country, with the debate over when that much-needed shelf will finally be attached to the wall, or who will start the bathroom re-tiling.
But the jam tomorrow culture may be coming to an end if bosses at DIY giant B&Q get their way, with plans under way to introduce variable pricing in stores that could offer early-bird discounts for shoppers visiting at off-peak hours and rising prices on the most popular lines.
Prices could even change on a minute-by-minute basis and on the customer’s wealth, with chief executive Ian Cheshire hoping to cash in in the same way airlines and hotels charge a vast array of prices.
Mr Cheshire, who has been testing some of the new ideas at parent company Kingfisher’s French operation Castorama, explained that he wants to use the knowledge he has gained from his non-executive role at Whitbread, which owns hotel chain Premier Inn, to bring a similar pricing structure to the world of DIY.
He said: “At Premier Inn, we have 20,000 prices for our hotel rooms. What’s to stop us doing something similar at B&Q?
“I think pricing will go the way of airlines and hotels with dynamic pricing. You’ll see different price points for the time of day, so something might be cheaper during a quieter time of day, compared with, say, a busy Saturday afternoon.”
“When people search for airline tickets, they go ‘bugger, I missed the cheap flight’ if they don’t book them early enough and the price has gone up. Why can’t we do that here?”
It appears his inspiration came from the unveiling of B&Q’s newest products last week in France, where the company showcased everything from the first dishwasher-safe barbecue to a self-assembly shed that can be built in just 45 minutes and a fire alarm that texts homeowners if their house is ablaze . The first step to Mr Cheshire’s new pricing is also inspired by the decision to use LED digital price displays across the company’s French stores, instead of the traditional printed price ticket. It means the price can be changed remotely, and saves hundreds of hours of price-gun action by staff.
It also allows the price changes Mr Cheshire wants to instigate and could eventually be programmed to react to chips in individual customers’ smartphones.
He said: “Mobile phones will have chips that will allow you to be followed around the store creating a personalised offer. You might pass an item which we think you will like, or hover over something for a little while, and we can then send you a message offering a discount if you buy it there and then, rather than wait.”
Yesterday, the British Retail Consortium pointed out that the number of shoppers on the high street had fallen 5 per cent in September compared with a year earlier, and although the warm weather hasn’t helped as customers wait longer before buying their winter wardrobes, people staying at home and using the internet for their shopping has also been blamed.Another survey by the BRC and Google out today also found that internet searches for DIY and gardening grew faster than any other retail sector, with searches on tablets up 77 per cent and by smartphone up 32 per cent.
Retailers have constantly been trying to adapt to new technology despite misgivings that customers were coming into stores, scanning barcodes on smartphones and finding cheaper deals elsewhere – something known as showrooming.
But stores have now embraced people using their phones, with many offering free wi-fi and codes that can be scanned to reveal offers and How To videos. Matt Piner, a research director at the retail analyst Conlumino, said it was important for high street retailers to become more innovative if they can compete with online-only rivals.
He said: “Personalisation and tailoring your offer is the way retail is going in the long term. If we look at the data that’s out there, it is becoming easier to track people and get a 3D picture of what their habits and attitudes are.
“Targeting prices is an extension of that. I think the difficulty of that is implementing it in a store setting, because you can shape the website people are using but changing the store environment is far harder.Retailers know that need to create more excitement to draw shoppers in, so this could go some way to addressing that.”
However, he warned if customers are pushed too far and come to expect discounts at every opportunity, it could reduce the value of the brand.
“Debenhams, for example, used to offer loads of one-off sales and people would stop going there when everything was full priced. They have since learned, but it was a tough lesson.”
Getting them in: ways to tempt the buyer
Tesco led the way with the Clubcard, tailoring specific offers to each customer, long before its rivals, with the Nectar card the only real challenger. The supermarkets giant spent at least £30m to buy the technology behind the Clubcard because it was so valuable.
“Unexpected item in bagging area” has become part of everyday life now, with some supermarkets running stores which only use self-checkouts. Asda is now trialling large-scale 360-degree self-scanners that can process an entire family shop automatically.
Fashion retailers have been looking at introducing mirrors where customers can see what they will look like in new clothes without the need to try them on. Stores hope to entice customers in from the street through mobile apps that will show the shopper in the items in their windows.
In South Korea, Tesco successfully launched a virtual store for busy commuters who could scan pictures on the subway with their smartphones, order the food and pay, with delivery to their homes later the same day.
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