14-07-2025
Caitríona Redmond: What is dynamic pricing, and how will it affect the weekly shop?
Have you heard of dynamic pricing? In Ireland, it's a term that we may not be familiar with but we will be in the years to come.
According to the Collins English Dictionary, dynamic pricing is the practice of offering goods at a variable price depending on the level of demand, customer, or the state of the weather.
All supermarkets buy ahead of the season, forecasting trends more than a year in advance, and fixing prices with suppliers well in advance.
You may find it hard to believe, considering the recent heatwave, but July is the month when many retailers finalise Christmas menus if they haven't already.
The marketing, purchasing, and sales teams work closely together to decide on the offers they will present. They use the data collected from previous years to inform them about which products will be in high demand if the weather gets warmer.
In Ireland, that means increased sales of not only ice creams and burgers for the barbecue but also razors and hair removal products.
It's critical to predict consumer demands for price setting. This helps retailers to stay ahead of the weather by having seasonal products in stores, ready to fill the shelves if an early heatwave like the one last May occurs.
It's not a crystal ball but it certainly makes planning for the weather easier.
We are all familiar with seasonal sales. The summer sales happening now are a way for retailers to maximise profit on out-of-season items.
This clears the way for newer stock and helps the seller get revenue for a product that may be less appealing once the shiny new thing arrives on the shelves.
You could describe a seasonal sale as a form of reactive pricing. A dynamic price, on the other hand, is characterised by a rapid shift or spike in price.
Airlines use dynamic pricing to adjust the cost of a ticket based on demand, with the price often increasing as fewer seats remain available.
Concert tickets can be dynamically priced and can result in two people paying radically different prices for identical seats. The only difference in the tickets is that one concert-goer bought their ticket in a high-demand sale.
Little wonder that consumers who pay the higher price often feel hard done by.
The first step to help retailers initiate dynamic pricing in Ireland is to have shelving labels that can be changed rapidly. Sending a staff member into the supermarket with a bundle of labels to be swapped in or out is not an efficient approach.
Most retailers in Ireland have already begun, if not completed, the process of changing their shelves to digital displays. Those displays can reflect a new price at the push of a central button.
This frees up staff in-store to take care of customers and ensures that the price on the shelf is always accurate.
Changing prices quickly is not without its problems. Retailers run the risk of the price changing between when a shopper picks up a product and the price increasing by the time they get to the checkout.
For consumers, knowing that prices are up-to-date is important. The price on the shelf is known as an 'invitation to treat' and we are free to accept the price and pay for the item or walk away if it doesn't meet our needs or budget.
In an online setting, the price you pay is instantly locked once you place the item in your virtual cart. In brick-and-mortar retail, the price isn't charged until you head to the checkout.
Norwegian supermarket Rema 1000 uses dynamic pricing and has been voted one of the best-value supermarkets in that country.
The business gets around the tricky pricing aspect by only increasing prices overnight when the supermarket is closed. Price drops can happen during the day, and there's seldom an issue with a consumer picking up an item that costs less by the time they reach the till.
Of course, Irish shoppers already benefit from dynamic pricing under another guise. Those among us who have bought yellow-sticker items close to their sell-by date already know how much of a bargain these can be.
The supermarket maximises its profit on a product that otherwise would have been disposed of, something the retailer would also have to pay for.
Many organisations believe that changing to dynamic methods will benefit Irish consumers in the long run. However, there are exceptions.
The Competition and Consumer Protection Commission opened an investigation into the methods and handling of sales of Oasis tickets last September. No doubt several businesses are awaiting the outcome of that with bated breath.
One thing is sure: dynamic pricing is here to stay, and not just in retail settings. Dynamic price tariffs in the energy market are on the way, albeit a little delayed until June 2026.
The Commission for Regulation of Utilities states that this will help consumers shift their energy use to times of day when prices are lower. Ultimately, it saves the homeowner money.
REDMOND RECOMMENDS:
TooGoodToGo is a funnel for businesses to sell their surplus food and save it from landfill. It's a win-win for the consumer who can pick up a bargain bag at a discount and saves the retailer money on disposal costs.
Aldi, for example, offers daily discount boxes for just under €5. These are mystery boxes, though, and can be hit-and-miss depending on the retailer. Check out the previous buyer reviews before locking into a purchase.
Olio relies on local champions who collect food surplus from stores and distribute it for free in the community. The volunteers are trained in food safety and hygiene.
Both apps are available on phone app stores and offer an alternative way to save money on your groceries.
