How Retailers Can Strengthen Sustainability With Data-Driven Pricing Strategies

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Sustainability is no longer a nice-to-have for retailers. It’s a must do if they want to meet consumers’ increasing demand for brands that prioritize environmental and social responsibility. According to Nielsen, the U.S. sustainability market is projected to reach $150 billion in sales by 2021, and nearly half of consumers say they would definitely or probably change their consumption habits to reduce their impact on the environment.

Retailers across verticals must place a greater emphasis on sustainability to remain competitive and reach the growing number of consumers who support prioritizing these efforts when making purchasing decisions.

To maximize sustainability initiatives effectively, retailers should take advantage of science-backed analytics. These insights are a powerful way to gauge consumer demand for sustainable products with current and past sales data, identify the most profitable promotional strategies, and minimize markdowns and waste from the start.

1.     Better track, monitor and gauge customer demand

When monitoring the evolving demand for sustainable brands or products, retailers can feel like they’re taking a shot in the dark trying to guess consumer demand and adapting to changing behavior. They risk losing a lot of money if they don’t know who will buy into this category, how many products they need in stock, or what the right pricing strategy should be to remain competitive.

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The good news is retailers can use data to evaluate changes in demand and establish the best pricing approach for sustainable products, creating a balance between price perception and profits to match their business goals. This requires better understanding what matters to socially conscious consumers and when they are willing to pay more for sustainability.

Of course, there will be certain categories or products where consumers are more brand loyal and may not be willing to pay the premium to buy sustainable alternatives. However, retailers won’t be able to determine which products are worth stocking up on without the data to constantly monitor trends and understand what is popular at any given moment. Having real-time analytics on consumer demand will help retailers confidently identify margin opportunities and evaluate which sustainable products are worth investing in.

2.     Increase promotional effectiveness

When thinking about promotional effectiveness, retailers can use analytics to quickly determine if promoting a sustainable, locally produced brand is performing better than a national, less sustainable brand. By understanding the financial impacts of each decision, like if brand A will drive more revenue than brand B, retailers can determine which financial tradeoffs they’re willing to make.

Additionally, retailers can use analytics to see if consumers shift to new affinities when they buy a sustainable brand. For example, if a customer is buying cage-free eggs, they are more likely to buy other sustainable products than those who buy the cheapest eggs on the shelf. With this information, retailers can deliver effective, targeted promotions to sustainability-minded consumers for other products, and identify new opportunities to increase basket sizes and win consumers over.

3.     Manage the entire lifecycle to reduce waste from the start

Supermarkets are responsible for throwing away 43 billion pounds of food per year, and the fashion industry produces 92 million tons of solid waste each year globally. Think about how much waste the entire retail industry must produce!

Retailers can embed sustainable practices into their own businesses with a distinct markdown plan that reduces this type of waste. If retailers can manage supply and demand more efficiently from the minute the product hits the stores, as well as use superior base and promotional pricing practices early in a product’s lifecycle, they can run a leaner inventory and be in a better position to minimize markdowns and waste before it’s too late.

To do this, retailers must put together markdown plans optimized for unsold inventory and consumer behavior across all channels. They need to discount these items while there’s still market demand, preventing last-minute salvaging or waste, such as rotten food or last season’s clothes being thrown into bins and dumpsters. Businesses can then better predict and measure markdown results while dynamically updating markdown plans.

By preparing early in the process, stores don’t have to do the difficult, expensive work of pushing last-minute markdowns and throwing perishable or outdated products away if it’s not successful. They already have the most profitable markdown plan from the start to maximize sales, margins and sell-through, minimizing waste and creating a more sustainable business.

Drive Sustainability According to Your Own Unique Goals

Consumers’ demand for sustainable products is rising, and retailers need to prepare their pricing strategies now to set optimal prices, promotions and markdowns that adjust to evolving trends and keeps customers loyal. A sound pricing strategy that dynamically adjusts prices based on real-time data will ensure that retailers are better positioned to prioritize sustainability, and to remain relevant to socially conscious shoppers now and in the future.


Matthew Pavich, Managing Director of Global Strategic Consulting for Revionics, an Aptos Company, develops data-informed, industry-leading pricing strategies, processes, analytics and organizational fluency to help retailers meet the challenges of today’s increasingly dynamic and competitive landscape. As a leader in pricing and business strategy development, Pavich has 20+ years of experience in retail encompassing consulting, buying, pricing and marketing across a variety of retail verticals, industries and regions.

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