One of the primary reasons for the French Revolution of 1789-1799 was the problem of rapidly-rising food prices. The people simply couldn't afford the "cake" that Marie Antoinette told them to eat. Several decades later, a Frenchman named Louis Auguste Boileau started another, less well-known revolution: Pricing. Boileau was a retailing visionary -- a bit like a 19th century Steve Jobs – and, like Jobs, was light-years ahead of his time. Boileau had a vision of a social retailing experience for 19th century Paris women, and engaged Gustave Eiffel (yes, THAT Eiffel) to build the world's first department store, Bon Marche in Paris. (Illustration by Fred B. Taylor).
The Price Tag
Boileau came up with the idea that goods for sale would be spread across the store's floor, rather than stuck behind a counter, waiting to be shown by a sales assistant who would often tell the customer, "you can't afford that -- look at this," which was common practice at the time. This way, women could literally handle the goods -- and feel that those goods were really "within reach." And Boileau worked more retail magic: He created the price tag! As a result, the customers looked, "touched," and bought. Some say that Boileau's initiatives led to the development of "vanity price points," (e.g. a price of FFr 9.95). Another reason for the popularity of such price points was the audit function they performed, when the 19th century Parisian sales assistant engaged with the customer to make change, rather than just slip a 10 Franc note into a pocket until later.
Shortly thereafter, Frank Woolworth and Aaron Montgomery Ward (inventor of mail order) adapted the price tag "revolution" and brought it to America. The rest as they say, is "history." And to paraphrase George Santayana, history is indeed repeating itself.
The "Deer-Now-Have-Guns" Syndrome
In the 21st century, the new revolution in retailing is the Internet. To survive, the online retailer has to embrace technology -- especially with regard to pricing. And, while pricing is the not the entire problem, it's a good start. At the moment, consumers are better harnessing the powers of technology in use against the retailers, rather than vice-versa, and retailers are scrambling to find out how best to respond to this new, near-awesome power and advantage that the consumer possesses. So, today, instead of being the "hunted," consumers are the "hunters." This is what I call the "deer-now-have-guns-syndrome." The "guns" the consumers are using include price comparison websites, smartphones, and tablet apps. These technological advances (remember almost 50% of all cell phones are now "smartphones" -- and those numbers are rising exponentially) allow the consumer, in real-time and in any location (including brick-and-mortar stores), to find and buy the products -- online or off.
Takeaway for Retailers:
From a pricing perspective, online retailers must follow the consumer -- and embrace technology. This would include apps for sales floor staff linked to CRM (Customer Relationship Management systems), and price-setting technology which has been around for quite a while now. But even more importantly, it must also include the new kind of Competitive pricing intelligence tools and monitoring platforms offered by leading companies in the field such as Upstream Commerce.
Yes, online retailing is looking for its next Boileau -- and, hopefully, several Boileau’s will “boil” to the surface. Capturing the attention of the newly-empowered, technically-inclined customer is an important part of the modern revolution for all retailers.
What do you think about the new pricing revolution? Jon