What:  Coresight provides a panorama of how AI can enhance dynamic pricing.

Why it is important: Dynamic pricing is going to be paramount in the future for department stores in order to tailor-made their promotions to each and every customer.

The report "Precision Pricing in Retail: AI-Driven Pricing Decisions for 2024 and Beyond" by Coresight Research highlights the challenges in price setting in the current volatile macroeconomic environment. It emphasizes the importance of achieving precision in price planning and setting to attract and retain customers while ensuring profitability. The global retail pricing optimization software market is expected to reach $1.6 billion in 2024, growing at a CAGR of 16.5% between 2023 and 2028[1].

Key points from the report include:

• Increased Macroeconomic and Geopolitical Volatility: Economic volatility, exacerbated by events like the Covid-19 pandemic, inflation, and supply chain disruptions, heightens pricing challenges. Retailers need dynamic pricing strategies leveraging technologies like AI to adapt to shifting shopper needs[1].
• Complexity of Pricing as a Connected Business Function: Effective price planning depends on integrating merchandising functions like promotion management and demand forecasting across sales channels and store locations. Lack of mature integration across these functions can hinder optimal price planning[1].
• Role of AI in Precision Price Planning: AI and machine learning can address challenges such as rule-based pricing limitations, inaccurate inventory planning, and rising costs. Leveraging AI enables retailers to analyze vast amounts of data in real-time for better understanding of shopper preferences and demand patterns[1].
• Structured Approach to AI-Based Pricing: Retailers can benefit from AI-based pricing software by managing end-to-end pricing throughout the product lifecycle. Following a structured approach involving clear pricing strategy, data integration, overcoming operational silos, and technology integration across functions is crucial for successful implementation.

The report underscores that retailers adopting advanced pricing solutions with a long-term strategy will be better positioned to navigate market dynamics, enhance competitiveness, and drive profitability amidst increasing input costs and demand volatility.

How AI can enhance dynamic pricing