Black Friday is the biggest sales event of the year. If you sell at different locations or in different countries, make sure you leverage localized pricing. Learn how this pricing model will increase your profits, how you can enhance its effectiveness with AI and how to master its implementation.
Localized pricing: Tailor offers and prices to different regions
The general interest in Black Friday has risen in recent years across Europe. In a pwc study of 2023, 73% of consumers said they were generally interested in buying something during the sales event. There is no indication that interest will not be similarly high this year.
However, products sell at a different price point in London than in Bratislava and discounts work differently if you are the only local supplier of a product than if you have a lot of competition. That’s why localized pricing strategies are crucial for retailers, whether they have one location or multiple locations across different countries. Especially when deciding on your Black Friday pricing, you want to tailor prices to local economic conditions, customer preferences, and competitive landscapes to effectively entice customers to buy.
However, it can be tedious work to get and manually analyze all the relevant market data for the different markets or locations your company is active in. Given the ever faster and more complex market dynamics, manual regional pricing is becoming more and more impossible.
Black Friday pricing in different markets: Localization with predictive pricing
Thanks to machine learning and AI, localizing prices has become easier than ever and is now a lever every retailer can pull to increase the effectiveness of their Black Friday pricing. How does it work? Enter predictive pricing solutions.
Predictive pricing uses AI algorithms to analyze all price-relevant internal and external data by location or market. Reliably and in a matter of seconds. Based on the collected data, the solutions calculate the current price elasticity for different markets down to the product level. The speed of the calculation makes it possible to optimize the price of not just a few, but all relevant products. And that might be more important in 2024 than in previous years, as 95% of customers said inflation will impact their spending, according to a recent Klaviyo study.
A big advantage of predictive pricing solutions is also their foresight: You can simulate how price changes will affect demand and sales in the future, and with that knowledge make pricing decisions for Black Friday with zero risk. What is more, you can forecast stock levels and demand for different locations based on historical data. This is particularly helpful for Black Friday pricing as it enables retailers to select attractive products for promotions with confidence, avoid understock or overstock, and choose the right discount rates.
Next level optimization: Adjust prices across different sales channels
You reach the next level of predictive pricing when you not only optimize product prices for each market, but also take the sales channel into account. This is because the willingness to buy and customer behavior differs depending on whether customers are shopping in-store or online, on a marketplace, or on a brand website.
With 7Learnings, you can optimize prices separately for each of your channels. If you pursue different goals in local retail than in online business, for example, you can make this differentiation with just a few clicks. With manual work, this level of precision would not be economically viable. With AI, it’s a breeze. As our solution adjusts prices dynamically by analyzing near real-time data, you will never risk running outdated strategies.
Implementing predictive pricing for different regions
With Black Friday fast approaching, adjusting your pricing strategy across different regions is crucial. A well-executed predictive pricing approach allows you to respond effectively to local market dynamics.
- Collect and analyze regional data
The first step involves collecting and analyzing relevant data points to determine optimal prices in different regions. This includes information on sales patterns, consumer preferences, and local economic conditions. The application determines price elasticity for your products in different markets to reveal the price points needed to achieve your profit and/or sales targets.
- Forecast demand and inventory levels
Use predictive pricing algorithms to forecast demand and inventory. See how demand will change with and without discounts. This helps plan Black Friday campaigns with a long-term view. You don’t just want to increase sales for a week; you want to boost profitability and make the most of a product through its lifecycle.
- Define regional strategies
Despite all AI support, you need to know where to look for relevant information and use it strategically. Be sure to look for regional differences and incorporate the insights into not only your Black Friday strategy but also develop general regional pricing strategies.
Case study: Shoe retailer Tamaris achieves a 5% reduction in discount rate
The Wortmann Group is primarily known for its shoe brand Tamaris, but also sells other shoe brands. The largest shoe production and retail company in Europe sells an extensive product assortment in more than 70 countries. Tamaris wanted to improve profitability in existing markets and open up new markets as well.
Tamaris decided to implement 7Learnings to optimize its pricing in combination with Tradebyte, an online platform to centrally manage prices for all markets and products.
The results of the new setup are impressive: administrative efforts for price management were halved, and thanks to the AI-driven analyses of the price elasticity of individual products and the automated price adjustments for local markets, Tamaris was also able to reduce discount rates by 5% without reducing sales numbers. A massive economic advantage that has boosted and will continue to boost the company’s growth journey.
Enhance localized pricing with AI and boost Black Friday success
With AI-driven predictive pricing solutions, retailers can significantly improve their profitability. On Black Friday and every day. Instead of defining one Black Friday pricing strategy, AI-based pricing strategies are able to optimize prices for different markets, and sales channels.
The most advanced method of price optimization is predictive pricing as it enables retailers to adjust prices with foresight – which is especially important on Black Friday to avoid giving unnecessary high discounts but take into account the future demand of a product and make the most of the total product lifecycle.
If you want to get an idea of how much of a difference predictive pricing could make for your business and your Black Friday success, try our profit uplift calculator.
