Yield Management Entering Retail

What has long been practiced by airlines and hotels starts to evolve in the consumer retail business: Yield Management.

Yield Management, also known as Revenue Management, is the process of understanding, anticipating and reacting to consumer behavior in order to maximize revenue or profits. Companies that engage in yield management usually use complex computer systems. The three industries where yield management is used most heavily are passenger air transport, lodging and rental car. Airlines monitor through the use of specialized software how seats are being reserved and react accordingly, as for example by offering discounts when it appears as if seats will otherwise be vacant.

Similar concepts have appeared in Japanese retail stores. Nokia-anthropologist Jan Chipchase took this picture that shows the digital price signs in a Tokyo supermarket.

The ability to dynamically change prices based on contexts such as time of the day, demand, events in town, customers in proximity, or the levels of stock, creates many opportunities for growth and profits.

When will we see dynamic pricing in the "Buy on Board" models?

Jan's blog: Future Perfect