In March, ISTAT (Italian National Institute of Statistics) estimated a drop in retail sales in February of 20.5% in revenues and 21.3% in products sold, but traders’ problems are not merely related to the COVID-19 emergency. With the exponential growth in transactions of the online sales giants, active in every sector, retail sales have been experiencing a negative trend for years. An increasingly aware consumer, able to find in a few clicks information on the price of a product from various retailers, a scenario of increasing competition and a distribution network capable of reaching every potential customer in a few hours have led to the need to rethink the physical store as we have understood it until now.

In such a highly competitive context, it is necessary to find new strategies to allow retailers to remain always attractive to their customers and to offer products at prices consistent with those of the market.

In fact, there are effective strategies that retailers can put in place to find the right price at which to sell their products according to the new needs and spending capacity of consumers.

  • Review pricing processes on the assumption that this crisis is new normal.  This means remaking every part of your business to support agility in responding to both large and small changes, with the ability to quickly gain in-depth insights into changes in shopper, competitor, and market behaviors. Some of the AI-drive price optimization software on the market can intercept demand signals and detect evolving price sensitivities and elasticities in real-time.  Such pricing intelligence systems enable retailers to automate pricing processes by offering pricing suggestions even in real-time. The study of recorded transaction data in the past, combined with the ability to make sales forecasts, commercial objectives and price limits defined by the retailer based on costs and constraints with manufacturers, allow the definition of prices perceived as fair by consumers, while also sustaining the margins in the overall mix to achieve business goals.
  • Focus on long-term customer relationship and invest in innovation. In this challenging scenario, it is crucial to make strategic decisions that preserve the relationship with loyal customers instead of maximizing short-term opportunities and undermining the credibility of the business.  Recent research has established that shoppers are very tolerant of frequent algorithm-based price updates as long as they perceive those prices to be fair and non-arbitrary. Sudden surges in demand can lead retailers to increase prices by thinking about short-term profit, but consumers, as we have pointed out, increasingly informed and price-conscious, risk being pushed directly into the arms of the competition. Leveraging science-based price optimization enables pricing teams to do what-if scenario analysis to understand exactly how a given price change will affect shopper behaviors, factoring in a wide array of variables with a complexity that human-driven modeling could never support: price elasticity of demand, competitor prices, seasonality and a continuously updated and revised demand analysis based on data from new entrants. The result of these analyses allows the trader to offer his products at the best prices to respond to market conditions in real-time.
  • Think holistically about pricing. This includes not just the continuous monitoring of the sales prices, but also the promotions, the pricing variations of suppliers, and the retailer’s margins so as not to forget the actions of competitors. During the COVID-19 emergency, we saw how the demand for products such as alcohol, disinfectants, gloves, and masks, but also yeast and flour, just to name a few, grew to triple the average and how this caused problems in sourcing and pricing choices. Because of the complexity of the calculations needed to predict and respond to these changes quickly and correctly, retailers need to evolve towards a fluid, data-based approach so they don’t miss out on business opportunities.


Retail has always been a delicate business, but in recent years keeping a store up and running has become even more complex, almost impossible without reviewing your strategies and investing in innovation. Fortunately, retailers who strategically adopt and use modern data-driven prices compete more effectively and profitably – all while presenting their shoppers with prices that engage them on the products they care most about.