Published in: Pricing

Retailers Can Benefit From the Back-to-School Spending Boost!

The Right Pricing and Promo Strategies Make the Difference

As the back-to-school (BTS) season approaches, retailers have a unique opportunity to boost their sales. The key to unlocking this potential lies in implementing data-driven pricing and promotional strategies that cater to the evolving needs of today’s cost-conscious consumers. With inflationary pressures easing compared to previous years, shoppers are still hunting for value and making careful purchasing decisions. 

According to GlobalData’s research on the UK market, the percentage of consumers who reported actively reducing their back-to-school spending to save money rose by 5%, reaching 73% in 2023. Moreover, in order to provide all items required, customers are seeking low-cost alternatives. (source)

At PricingHUB, we understand that BTS is a prime period for retailers to enhance their profitability—but it requires precision and a keen understanding of customer behavior. Let’s dive into how retailers can leverage intelligent pricing strategies to win over shoppers and capture larger basket sizes during this pivotal time.

The Consumer Shift: Downtrading and Value Hunting

This year’s BTS season is marked by a shift in consumer behavior known as downtrading, where shoppers are opting for lower-cost alternatives to save money. Whether it’s choosing private-label products, switching to more affordable retailers, or purchasing items on promotion, value is the key driver of decision-making. This trend also presents a unique challenge: consumers are increasingly less loyal to specific retailers, making it critical for retailers to stay competitive by offering irresistible value.

How retailers can respond:

• Leverage consumer price sensitivity: With PricingHUB’s AI-powered pricing solutions, retailers can elaborate a price based on the scientific measure of price elasticity which allow retailers to set the right prices and stay competitive
• Targeted promotions: Consumers are actively looking for deals, and retailers can use data-driven insights to tailor promotions that meet local demands while retaining profitability.

Why One-Size-Fits-All Pricing Strategies Don’t Work for BTS

Back-to-school shopping varies significantly from region to region due to different levels of household purchasing power and competition available locally. These variables make it impossible to adopt a one-size-fits-all pricing strategy.

The solution? Retailers need localized, analytics-driven pricing strategies to navigate these complexities. PricingHUB’s platform allows retailers to build localized pricing models that take into account regional factors such as competition and demand fluctuations.

Balancing Pricing and Promotion Strategies

Retailers vary in their approach to BTS sales. retailers committed to an Everyday Low Price (EDLP) strategy may choose to reduce prices across the board, while “Hi-Lo” retailers might focus more on promotional pricing (pricing strategy where a retailer initially charges a high price for a product and then subsequently decreases the price through promotions, markdowns, or clearance sales). Regardless of the approach, retailers need to rely on data-driven pricing strategies to ensure they’re making the right moves at the right time.

Data to the rescue: PricingHUB’s analytics capabilities allow retailers to assess which products to mark down and how promotions can boost foot traffic while maintaining profitability. Using historical data and predictive analytics, we help retailers understand the ideal timing and depth of discounts to match consumer behavior without eroding profit margins.

Promo Strategies: Critical for Success

Promotions play a vital role in any retailer’s BTS success. However, simply offering blanket discounts is no longer enough. To truly win over consumers, retailers need to deploy highly-targeted promotions based on consumer preferences and buying behavior.

At PricingHUB, our platform enables retailers to segment their customer base and deliver tailored promotions that resonate with each group. Whether through email campaigns, in-store discounts, or personalized offers, retailers can provide value while driving customer loyalty.

Online Shopping: Convenience & Efficiency are key

Busy parents value convenience, and retailers can drive conversions by enhancing the online shopping experience with easy navigation, quick checkouts, and fast shipping. Early shopping trends show that back-to-school shoppers start earlier each year, often targeting end-of-summer sales. Moreover, with online shopping continuing to dominate, projected to grow by 11% according to Adobe Digital Insights, optimizing e-commerce platforms and providing seamless in-store pickup and delivery options is crucial. Additionally, Statista predicts that mobile commerce will account for 73% of all e-commerce sales by 2024, making a user-friendly mobile experience essential for success. (source)

PricingHUB can help retailers meet the needs of busy parents by providing advanced pricing solutions that enhance the online shopping experience. By using PricingHUB’s dynamic pricing and AI-driven insights, retailers can offer competitive and personalized pricing.

Avoiding Markdown Missteps: Timing Is Everything

Markdown strategies during BTS are often overlooked by retailers, but they can significantly impact performance. Retailers who wait too long to mark down items risk losing out on potential sales, while others who discount too early or too broadly might cannibalize their margins.

The biggest mistake? Applying markdowns uniformly across all stores, despite varying BTS timelines. A smarter approach involves using advanced optimization tools to tailor markdowns to each store’s unique demand patterns. AI-powered algorithms help retailers avoid blanket discounting strategies and instead focus on region-specific markdowns based on consumer behavior and real-time demand data.

By avoiding traditional markdown pitfalls, retailers can increase their BTS profitability without sacrificing customer satisfaction.

Bigger Basket Sizes Mean Bigger Opportunities

One often-overlooked benefit of the back-to-school season is its potential to increase basket sizes. As parents and students stock up on school supplies, they frequently add grocery items to their carts. Retailers can capitalize on this by implementing strategic cross-promotions that bundle grocery essentials with back-to-school products. Additionally, a McKinsey & Company study suggests that Gen Alpha influences a staggering $1.5 trillion in household spending decisions globally. Retailers can appeal to this generation by offering trendy designs and eco-conscious products.

For example, offering a discount on healthy snacks for school lunches alongside deals on school supplies can encourage larger purchases and enhance the overall shopping experience. PricingHUB’s platform makes it easy to identify these opportunities and drive increased revenue through personalized offers.

Final Thoughts: Winning BTS with Data-Driven Insights

The back-to-school season represents a significant opportunity for retailers to capture more sales and grow market share. However, success requires more than just lowering prices or offering generic promotions. By leveraging data-driven pricing and promotional strategies, retailers can meet the diverse needs of today’s value-seeking consumers while maintaining profitability.

With PricingHUB’s advanced analytics and AI-powered pricing solutions, retailers can navigate the complexities of BTS with precision, ensuring the right price at the right time, tailored to each market. Whether it’s through localized pricing, targeted promotions, or smart markdown strategies, PricingHUB is your partner in making this BTS season a success.

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