Retailers, Beware — the Appeal of Mega-Discounts Is Wearing Off; Shoppers Now Prefer Quality Over Price

After a spell of heavy discounting by beleaguered retailers, the joy of low prices may be starting to wear off for consumers.

A new study by retail technology platform First Insight found that quality is becoming more important than price to most consumers.

The study — which surveyed 1,000 people in the U.S. — found that 53 percent of respondents rate quality as the most important factor when making purchases, compared with price (38 percent).

Over the past three years, retail has seen an uptick in bankruptcies, with big names like Payless ShoeSource, Sports Authority, BCBG and Toys ‘R’ Us all seeking Chapter 11 protection amid heavy digital competition. As a result, spooked retailers have increasingly employed steep discounting and promotions to lure consumers into stores. At the same time, insiders in other retail categories that weren’t swept up by the supposed retail apocalypse — auto, electronics, home appliances and furniture — have also feared consumers would start to expect heavy discounting on their wares.

But First Insight’s new data suggests that consumer expectations for discounts are falling, with an increasing proportion of consumers noting that department store discounts had no influence on expectations for discounts across other categories, including vehicles, smartphones, furniture, home appliances and home electronics.

“For years, consumers have been trained by department stores and mass merchants to focus on finding deals, and many retailers have responded with deep discounts,” said First Insight founder and CEO Greg Petro. “The results of this study indicate that we may be reaching a tipping point, as retailers who have been focused on providing consumers with the quality, differentiated products they want and the price they expect are gaining greater traction and changing the consumer mindset.”

Survey participants were asked about their shopping habits, purchase behavior and influences driving decisions. First Insight tracked changes in consumer sentiment on the impact of widespread discounting by department stores and mass merchants from March 2017 to December 2017.

“As the pendulum swings away from discounts, retailers have an opportunity to capture greater sales through quality products in every category, from apparel to furniture and appliances,” Petro said.

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