Through a special arrangement, what follows is an excerpt of an article from Retail Paradox, RSR Research's weekly analysis on emerging issues facing retailers, presented here for discussion.
An early look at a consumer benchmark commissioned by FMI, Daymon Worldwide and the Hartman Group, Reframing Retail through the Lens of Changing Food Culture, highlights how differently Americans are buying, preparing and eating their food. But what particularly piqued our interest was what it revealed about consumers' attitude about price.
It comes to us at a fortuitous time, while RSR is in the midst of collecting retailer respondences to our 2013 Pricing Benchmark survey.
Last year, our respondents reported they continue to increase the number of price changes sent to stores, are most concerned about increased consumer price sensitivity, and battle hard to keep up with their competitors' prices. This year, early findings tell us these concerns have only escalated.
The trouble is, the consumer is telling a very different story. According to the Food Culture study: "Appealing to consumers today requires much more than offering a wide range of products at the lowest price. While this is an effective way to attract shoppers, it does not secure loyalty. Instead it conditions shoppers to look elsewhere to find a lower price. Another way to offer value and build loyalty is to understand what consumers want that they can't get elsewhere. Part of that is offering consumers products that go beyond the usual ... which involves creating a compelling retail environment that inspires shoppers."
The piece goes on to highlight the importance of creating optimized assortment, which in their view is "curated" by the retailer to include those items customers care about, and specifically exclude products that are not relevant to them.
"Most consumers (62 percent) want to shop where there are always unique products to try. But presenting the right product mix is critical. Shoppers expect retailers to be good curators, and to carry what they want and omit what they don't want."
Of course, curated assortments are the sweet spot of many niche independents, but there is significant relevancy to the larger retail world as well.
Back to our current retailer pricing survey, so far, 41 percent of survey respondents report the number of price changes sent to stores and other channels has "increased significantly." We continue to ask why. Do mobs at stores on Thanksgiving Day really mean this is our only option? Do we mistake hysteria for loyalty? And, if we look at our annual financials, don't we see that the overarching impact of this hysteria on our business was mostly much ado about nothing?
Are most retailers overestimating or underestimating consumers' sensitivity to price?