Shoppers looking forward to having their school-age children back to in-person learning this autumn are eager to shop earlier and spend more than in recent years. Meanwhile shoppers in England are likely to feel some euphoria as the remaining coronavirus restrictions are lifted starting 19 July.

But even as the social environment returns to ‘normal,’ the dramatic pandemic-era shift to online channels will persist, and retailers need to be much more vigilant than in past back-to-school seasons about presenting current, relevant prices and promotions to shoppers both in-store and online.

pexels max fischer 5212345

Spending will Increase, and Online Spending Increases even More 

Retailers battered by COVID-era store closures, conservative shopper spending and supply chain havoc, not to mention Brexit shocks, will be relieved to see that 44% of back-to-school shoppers intend to spend more than last year, according to a Microsoft-commissioned online survey. But after more than a year of shifting to online channels due to pandemic conditions, many shoppers will continue to embrace those channels even as pandemic waves subside. A recent global shopper survey commissioned by DemandTec found that the percentage of shoppers who ‘always’ or ‘almost always’ shop online rose from 7% pre-COVID to 35%, a 5x increase, according to the study respondents, who spanned Brazil, France, Germany, the UK and the US.

Creative Retail Awards - TICKETS NOW ON SALE!
19 September 2024, London

Join the excitement and prestige of the Creative Retail Awards, the ultimate celebration of innovation and excellence in retail, leisure and hospitality design, offering unparalleled opportunities for recognition, networking and celebration.


Conversely, 78% of shoppers ‘often’ or ‘always’ shopped in store pre-COVID, which fell to just 39% in spring 2021. Even after the pandemic, only 49% anticipate often or always shopping in-store, the global study revealed. Clearly, the importance of presenting prices that engage shoppers in every channel is more critical than ever.

Science-Based Pricing is Now Imperative

Shopping habits have changed so dramatically in the past two years that not only have channel preferences been shaken up, but the items shoppers are most sensitive to prices on – Key Value Items (KVIs) – have also shifted noticeably. Reliance on assumptions from past back-to-school seasons for prices and promotions will pale in effectiveness to prices and promotions presented by retailers who leverage data science to get up-to-date, highly accurate insights into shopper price sensitivity by channel – along with channel-specific price recommendations, down to the item-location level. 

The science-based approach enables retailers to deliver the elusive win-win: surgically crafted prices that engage shoppers on the items that are most important to them, while safely recovering margin elsewhere in the mix to ensure business and financial goals are achieved.

For many retailers who have not yet embraced science-driven pricing, there is a fear that shoppers will be suspicious of algorithm-driven pricing. However, shopper research reveals the opposite to be true. In an era dominated by online giants such as Amazon, shoppers fully expect retailers to be using machine-learning science to remain competitive in their prices. Moreover, shoppers accustomed to channel flexibility routinely, even religiously, compare prices, with 37% of global shoppers saying that they are more likely to compare prices today than pre-pandemic. Clearly, retailers cannot afford to get it wrong when it comes to pricing.

Back-to-School Shopping Spans Much of the Assortment, and Retailers Across the Board Need AI Science to Remain Competitive 

Anxious to return to in-person learning with their friends, and with their parents feeling more economic confidence than at the height of the pandemic, shoppers plan to spend on apparel, new electronic devices, backpacks and bags, personal care and beauty products, and also furniture and home or dorm décor, the Microsoft research confirmed. Retailers wanting to win their fair share of shoppers’ wallets will need to take a holistic view of pricing across their entire assortment in order to attract and retain valuable shoppers.

Fortunately, retailers are increasingly focused on the ability to take humans out of key processes and rely on AI-powered automation and dynamic pricing – in fact, 60% of retailers say they are already focused on putting AI-powered pricing in place.  Those who delay embracing retail pricing science risk losing ground rapidly to their more innovative competitors. 

Niranjan Headshot Jul 9 2018 scaled e1622711800177
Niranjan Chandrasekaran, Vice President, Worldwide Services, Customer Success and Support, DemandTec

i. “Shopper Perceptions and Behavior in a Post-Pandemic World: Five Truths, No Lies,” May 2021, a global shopper study commissioned by DemandTec.

ii. “Smart Pricing Strategies for the Post-COVID World,” a retailer study commissioned by DemandTec, June 2020.