Introduction
In this three-part series, “Revolutionizing Retail: The AI Playbook for Maximizing Profitability,” we explore how AI is transforming retail – from demand forecasting and pricing strategies to supply chain optimization and customer experience.
The insights shared in these articles have been developed based on in-depth conversations with the team at Centric Software, whose expertise in AI-powered retail solutions has provided valuable perspectives on how brands can drive profitability in an increasingly digital landscape.
Missed Part 1? Catch-up here.
Today, in Part 2 of our series, we focus on ‘Pricing for Profit: AI-Powered Strategies for Retailers’: in the hyper-competitive retail landscape, pricing isn’t just a numbers game – it’s a delicate balance between maximizing profitability and meeting customer expectations. With the power of artificial intelligence (AI), retailers now have the tools to master this balancing act, transforming pricing strategies from static and reactive to dynamic and proactive.
The New Era of Retail Pricing
🔹1. Dynamic Pricing: Staying Competitive Without the Guesswork
Dynamic pricing, powered by AI, enables retailers to adjust prices in real time based on market conditions, customer behavior, and competitor activity. This strategy ensures that products are always priced optimally to drive sales while protecting margins.
Key Benefits:
1️⃣ Competitive edge: AI tools monitor competitor pricing and market trends to suggest adjustments that keep you ahead.
2️⃣ Customer-centricity: Tailor prices to meet customer expectations, boosting loyalty and conversions.
📊 From Insight to Impact: Petit Bateau, the French childrenswear brand, harnessed AI-powered product monitoring and image matching for smarter, fairer pricing decisions. The result?
📈 Expanded pricing insights across more styles and categories
🎯 Enhanced accuracy with best-in-class AI technology
🔗 Discover how Petit Bateau is leveraging AI to refine pricing strategies and stay competitive here.
🔹2. Markdown Optimization – Minimizing Losses, Maximizing Value
Markdowns are inevitable in retail, but with AI, they don’t have to mean a hit to profitability. AI-powered tools analyze product performance, inventory levels, and seasonal demand to recommend the ideal timing and depth of discounts.
Key Benefits:
1️⃣ Smarter discounts: Avoid over-discounting products that could sell at higher margins with targeted markdowns.
2️⃣ Reduced waste: Sell through inventory more effectively, reducing deadstock and clearing space for new collections.
📊 From Insight to Impact: Austrian footwear giant Leder & Schuh Group optimized their pricing and markdown strategy across 9 countries and 12,000+ SKUs with AI-enabled pricing and inventory technology. The result?
⬇️ 2.5x reduction in price markdowns
💰1% margin improvement—equating to €3 million in savings
🔗 Discover how AI fuelled data-driven, automated pricing helped drive future growth at Leder & Schuh Group here.
🔹3. The Role of AI in Long-Term Pricing Strategy
AI isn’t just a tool for short-term pricing adjustments – it’s a game-changer for long-term strategy. By analyzing customer data, seasonal trends, and market performance, AI helps retailers:
1️⃣ Forecast demand: Predict price elasticity and sales trends to set smarter baseline prices.
2️⃣ Test and learn: Conduct pricing experiments to identify what resonates most with customers.
📊 From Insight to Impact: US-based apparel brand Everlane, renowned for its commitment to sustainability and an ‘item-based’ approach, turned to AI to refine its pricing strategy and category expansion. The result?
🛍️ Seamless access to historical market data across multiple categories
⏳One-click retrieval of out-of-season pricing and trend insights
🤖Data-driven decision-making for smarter product launches
🔗 Explore how Everlane uses AI to stay ahead of market trends. Read the full story here.
Balancing Profit and Customer Perception
While AI provides the tools for precision pricing, retailers must also consider the human element; customers notice and respond to price changes, so transparency and consistency are key to building trust. For example, pairing dynamic pricing with loyalty programs or exclusive offers can enhance the perceived value of your brand.
The Future of Pricing in Retail
With AI, pricing becomes more than just a business function – it’s a strategic lever for growth. Retailers who embrace AI-driven pricing are not only more agile but also better equipped to meet customer expectations and drive profitability.
The question is: in a world where every pricing decision impacts your bottom line, are you making the most of AI to outpace competitors and delight your customers?
Part 3 Coming Soon: Mastering Inventory – From Replenishment to Deadstock Reduction
From its headquarters in Silicon Valley, Centric Software® provides an innovative and AI-powered product concept-to-replenishment platform for retailers, brands and manufacturers of all sizes. As experts in fashion, luxury, footwear, outdoor, home and related goods like cosmetics & personal care as well as multi-category retail, Centric Software delivers best-of-breed solutions to plan, design, develop, source, buy, make, price, allocate, sell and replenish products. To learn more, contact Centric Software.
Want to meet the Centric team in person? You’re in luck – Centric are sponsoring our next 4 events! Click through on the banners below for more information.
