Consumers Refuse to Pay Full Retail

Mar 27, 2003
George Anderson

By George Anderson

Consumers have become so trained by retail marketers to wait for the next big
deal they’ve virtually stopped buying anything that isn’t on sale, says a New
York Times

“The motto today is if it’s not 40 percent off, they don’t want it,” said Marshal
Cohen of NPD Research.

Retailer margins have been under pressure and the specter of deflation has
many concerned about future revenue and profit opportunities.

Retailers have been able to offset some of the margin concerns by pressuring
vendors for lower prices and by gaining some supply chain efficiencies.

The conflict in the Middle East, however, has brought higher oil prices and
added to manufacturing and distribution costs in other areas.

In the past, retailers simply passed along additional costs to consumers in
the form of higher prices.

Today, however, consumer attitudes, the economic environment and retail competition
make charging higher prices a risk many are loath to take.

Moderator’s Comment: Are consumers as sensitive to
pricing as is generally assumed? How can retailers increase their return on
investment during deflationary periods?
Anderson – Moderator

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