A high-quality product perfected to the nines is still no use to a person if he or she can’t afford it.
While more and more retailers have woken up to the reality that quality is important when it comes to items like footwear, apparel and food, many are missing the memo that price still matters (a whole lot) to shoppers.
A new study by technology research firm First Insight Inc. this week suggests retail executives have acted too hastily in dismissing the impact pricing has on consumer purchase decisions.
The company, which surveyed consumers and senior retail executives about consumer shopping habits and purchase behavior, found both groups (about 50 percent in each segment) named quality as the most important factor in purchase decisions. At the same time, however, nearly 40 percent of consumers felt low pricing ranked as most important, compared with just 20 percent of senior retail executives.
What’s more, only 20 percent of senior retail executives felt that consumers believed prices were increasing online, while 51 percent of consumers reported feeling that prices were edging up.
Again, 20 percent of senior retail executives indicated they felt consumers believed that prices were increasing in-store, compared with 60 percent of consumers.
To be fair, in an increasingly digital landscape, many retailers have seen a significant amount of research point to the importance of factors such as convenience, exciting in-store experiences, advanced web and mobile technology, as well as broad delivery options. In that same vein, digital-savvy experts have encouraged retailers to move away from pricing as means to upend competition since it can be easy to slip down a rabbit hole that hurts everyone’s profit margins. (Another study this year showed that consumers may forgo tricked-out experiences in fancy department stores in favor of cheaper clothing and footwear options at discount stores like TJ Maxx and Marshalls.)
First Insight’s latest study, however, highlights that retailers may be moving too far away from pricing awareness and that “a significant perception gap” between top retail executives and consumers possibly exists.
“While everyone agrees that quality of products is the most important factor in purchase decisions right now, these data show consumers are more concerned with pricing than many senior decision-makers in the retail industry suspect,” said First Insight founder and CEO Greg Petro, citing a challenge that will only be exacerbated by new tariffs. “Retailer and brand decision-makers need to understand consumers’ perceptions to ensure they are able to continually attract today’s consumers with the right price-value equation.”