The documentation of this phenomenon – what we often refer to as “NPR: Never Pay Retail” – is sobering. Maybe not surprising to you, but nevertheless, quite sobering.
First Insight reported: "Percentage of consumers who expect discounts when shopping in these categories:"
- Electronics - 90%
- Appliances - 88%
- Furniture - 85%
- Smartphones - 83%
- Vehicles - 80%
Their study further revealed that Baby Boomers are the most resistant to paying full price. Three out of four Baby Boomers would “definitely not” or “probably not” buy at full price.
Among Millennials, however, purchase decisions seem to be driven by factors other than price. Only 35-40% would choose not to purchase at full price.
The Pricing Credibility Crisis
However, a strong caution. (Why do we need to be reminded of this?)In the battle to deliver "what the customers want", there is one more thing: Discounts offered have to be real!
Yes, even if your name is Amazon!
A just-released study by the non-profit Consumer Watchdog reports that Amazon is posting “misleading list prices” on their site that significantly overstate the “discounts” Amazon shoppers receive.
From Consumer Watchdog's recap of their major findings (supporting the lawsuit they filed in California):
- “Amazon continues to include reference prices on more than a quarter of its stock”
- “About 40 percent of Amazon’s reference prices are greater than the highest price charged by any known competitor.”
- "On average, Amazon’s reference prices overstate the median market prices by $22, or about 20%.”
- "Amazon Marketplace vendors also post reference prices in excess of the prevailing market price, but they do so less frequently and to a lesser degree than Amazon itself.”
Ugh! What’s a retailer to do?
Is “pricing credibility” even possible? Especially when virtually every consumer expects a discount? Or, relies on Amazon for pricing information?Our conclusion (we know; not all will agree): In this "crisis of credibility", independent retailers are very well-positioned to seize this opportunity!
Since the rise of Wal-Mart, then category killers, then Amazon, your competitive edge - your “value proposition” - likely has not been ”lowest price.”
- Instead, you offer better selection
- more specialized merchandise
- more knowledgeable sales staff
- more personal customer service
- or other benefits that do matter to your best customers.
But to continue, you need to be even better. So, sharpen that "competitive edge" all the more!
If Baby Boomers predominate in your stores, an “every day low price” strategy is unlikely to be compelling.
- To retain Baby Boomer customers, your competitive edge must be attuned to offering "discounts".
- Just make sure that they work for you, too: a loyalty program perhaps (which also provides more customer data), or “special shopper” events, etc.
Price always matters, of course.
But credibility and fairness can still be your competitive edge!
Links to these studies:
