Halfords Launches Dynamic Pricing Strategy for Automotive Services

Halfords, a retail giant, has implemented dynamic pricing for its MOT and tyre services in order to boost profits and maximize the use of its garages.

Dynamic pricing allows for flexible pricing based on demand levels, a strategy commonly used in the travel industry. For instance, airlines and hotels may increase prices during high-demand periods.

Halfords is a retailer for motor and cycling products, as well as vehicle servicing through its autocentres. Over the past year, the company has implemented dynamic pricing for select services, particularly for tyres and MOT services.

According to Halfords during a results call on November 29th, the goal of the dynamic pricing strategy is to increase demand for under-utilised garages. In the first half of the financial year, the company reported a 7% improvement in the utilisation of its autocentres compared to the same period last year.

The initiative is also contributing to increased profit margins on revenue obtained from booking slot fees and higher margin per working hour for autocentre staff.

Stonegate Group, the pub chain that owns brands like Slug and Lettuce, implemented dynamic pricing earlier this year in some of its pubs, resulting in increased drink prices during peak times.

Halfords is focused on improving the profitability of its autocentres through dynamic pricing, as part of its larger effort to gain a larger share of the market while increasing profits. According to CEO Graham Stapleton, the company has surpassed its own expectations in terms of market share growth.

Attracting new customers is essential for any brand seeking to expand its market presence. Halfords has been using competitive pricing and promotional strategies to entice new customers. Despite loyalty programs typically being used to retain and increase purchases from existing customers, Halfords has revealed that 40% of new members in its loyalty program are completely new to the brand this year.

The Motoring Loyalty Club has significantly boosted Halfords’ MOT business, with 40% of MOTs this year being carried out by loyalty scheme members. The club, which boasts nearly three million members, presents a major growth opportunity for Halfords, as over 80% of members have never used the company for an MOT. The loyalty club offers two tiers: a free membership and a paid tier.

The premium tier, with nearly 200,000 members, has the highest ratio of paying to non-paying members to date. The company introduced the option for customers to sign up for the premium tier in-store at tills, which has contributed to this growth. The retailer mentioned making "efficiencies" in marketing spend in this half, but also made significant investments in the loyalty scheme and website. £5m was spent on IT and infrastructure, with the majority going towards improving loyalty and ecommerce capabilities.