B&Q is the U.K.’s largest home improvement and garden center retailer.  B&Q recently announced that it will begin testing variable pricing as a method of tailoring deals to its loyalty cardholders.  B&Q will launch this initiative by using WiFi enabled electronic shelf labels.  These price tags will identify passing shoppers by their mobile phone chips and will then access the customer’s shopping history using loyalty card data. From this, the system will identify a suitable price it thinks the customer is willing to pay and will display the price next to the item.

B&Q believes that this system of variable pricing will drive business, increase sales, and appeal to customers.  First, B&Q’s prices will change throughout the day, increasing traffic during traditionally off-peak hours.  Secondly, B&Q’s incentives to loyal customers will be more efficient than traditional coupons and discounts as customers will be rewarded with lower prices based on their loyalty level.  Finally, prices will change based on demand, similar to the pricing structure of airlines and hotels.

Discussion Questions:

1. What is variable pricing?

2. How is B&Q using variable pricing?

3. If you were a B&Q customer, how would you feel about its use of variable pricing?

 

SOURCE: Tom Ryan, Retail Wire, October 28, 2013