Posted on November 27, 2014 | By lindstrom

Fast Company: How Much Is That Ice Cream In The Window? Depends On The Season

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Why fluctuating supermarket prices should be coming soon.

A few years ago, driving over the Sydney Harbour Bridge, I realized something had changed.

In place of the decades-old, same-all-the-time fare, the toll had begun to fluctuate depending on the time of day and night. “That’s curious,” I thought. But my surprise was short-lived, as I reflected on how the price of nearly everything—stock prices, interest rates, airline seats, gasoline, gold, even chocolate—fluctuates these days.

As a branding guy, I’m called in when brands tank, customers flee the stores, or consumers start removing logos from their shirts. Traveling the world 300 days a year, I’ve seen more than my share of brand and retail innovations: dynamic store designs in Korea, where every wall, lamp, and shelf changes position by the hour; luxurious supermarkets in Zurich that produce butter and sausages before your eyes; ranking-based Tokyo retailers where only products selling well—this very hour!—stay on the shelves.

Our new digital universe creates fascinating—some might say scary—new opportunities for retailers. Innovations dating back to the 1950s, when the very name “supermarket” was invented, are looking like something from the Stone Age.

Consider the latest innovation from Target, a retailer previously known for sometimes ponderous decision-making. Target’s new Cartwheel app offers while-you-shop discounts to users, mostly highly coveted Millennials, up to 600 promotions at any one time. The discounts download right to the shopper’s phone, allowing her to redeem them at the cash register and save them for future shopping trips. Cartwheel even offers a “leader board,” where Facebook friends can compare how much they’ve saved. The results on Cartwheel are in: Active users increase their trips to Target, and their spending, by 30%.

Soon we’re likely to witness systems like these linked to Facebook, Instagram, and Twitter. If you’re well-friended, well-followed, or widely retweeted, your discounts will grow. And why shouldn’t they? If you’re the sort of person who spends two hours a day investigating the best prices and if you are connected to lots of friends, then the retailer knows you’re a great ambassador for the store. Where you lead, the world is likely to follow.

But even Cartwheel will soon become old news.

Last year I introduced a new retail concept in North Carolina. Just$ave Foods, a small discount chain, had problems figuring out why customers should choose them. Did they offer better prices than Walmart? No. Better selection? Of course not. So what could they use as their point of differentiation?

I arrived at the solution—gaming-based shopping—by considering insights into coupon shopping. Through hundreds of ethnographic visits to U.S. shoppers, I had learned that shoppers value coupons for two reasons—and discount pricing is not one of them! First, coupons are about the hunt, the joy of finding a good deal. Second, couponing helps to justify the housewife or househusband’s role, enhancing her or his sense of purpose in contributing to the family’s financial situation.

But shopping, with or without coupons, is painfully boring. Over a lifetime, the average shopper spends 23,300 hours pushing a shopping cart.

At Just$ave, we turned shopping into a game. As customers enter the store, a digital display announces: “Run! Milk is on sale—half price—for the next seven minutes!” Store-wide speakers announce: “Angus beef on sale!” We turned shopping at Just$ave into a contest, and customers loved it.

The Tokyo, Target, and Just$ave experiences lead us toward a world of creative retailing. We’re already seeing dynamic pricing in several different businesses. Since 2010, the ride-scoring app Uber has been charging “surge pricing,” as much as nine times the base price of the ride, during peak demand times. San Francisco’s gourmet meal-delivery service Sprig varies its delivery charge based on distance and time of day.

In the grocery business, the prices you pay will one day be based on several factors: your status, your popularity, and the time of day. Enter the store early in the morning, and you’ll find moderate prices. Revisit the store at 10:30 a.m., and prices will have hit rock bottom. Why? Because foot traffic is low at 10:30, and the traffic of senior citizens is high. As the day passes or the weather changes or the weekend approaches, prices will fluctuate—hour by hour, even minute by minute.

If it’s scorching hot outside, ice cream prices will be high. Is snow falling? There aren’t many takers for ice cream, and lower prices will entice them to buy. A frantic late-night run for ice cream? Don’t be surprised if the store asks you to pay an extra 7%.

Is it fair? Not entirely. But is it fair that the passenger sitting next to you on the airplane paid a different price, based on when he bought his ticket, who sold it, or—some day—how many Twitter followers he has?

We’ve turned into an instant-gratification generation, and savvy retailers are likely to follow us. The question is not if all this will happen, but when.

Ice Cream: Benik.at via Shutterstock

Posted in: The Future Of Everything

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