Customer data: the price is right - but is it fair?

The recent Which? complaint over supermarket pricing policies raises some important questions about retail sales tactics and the use of customer data.

In its “super-complaint” with the Competition and Markets Authority, Which? alleges shoppers are being fooled with “dodgy multibuys, shrinking products and baffling sales offers”.

The idea of variable prices for the same item or service is, of course, nothing new. Which of us hasn’t had to pay more for flights during school holidays, or for restaurants on Valentine’s Day?

The difference today is that retailers have now amassed a huge and growing bank of personal data.

This information is being analysed and used to target shoppers with offers and price promotions that reflect individuals’ interests and preferences. Such activity has gone largely unnoticed to date, but that may be about to change.

Most of us are relatively comfortable with retailers mining our personal data in order to offer tailored deals, or to recommend items that may appeal to us. Direct marketers have been doing this for decades. We become less happy when presented with complex and confusing packages, or when we detect unfairness.

Retailers have so far been reluctant to disclose the kind of shopper data they possess and the ways in which they use it. Rather than waiting for the next super-complaint, or for regulatory intervention, they should consider developing and following a pricing code that keeps them on the right side of their customers.

They could make pricing simpler again. A number of retailers are moving to an Everyday Low Price positioning, but this won’t work in every category. Others have provided price-matching or price-guarantees that worked well for a time but may have lost their power to reassure shoppers in recent years.

What most retailers should consider is rationalising the roster of promotions that have accumulated over the years and providing more information for shoppers on the shelf. There’s a lot at stake for retailers; however, it’s clear most don’t yet see the risk their pricing presents to the trust of their shoppers.

Liz Claydon is UK head of consumer markets at KPMG