Does anyone pay the full retail price anymore?

Discussion
Photo: RetailWire
Oct 16, 2018
George Anderson

We are all in search of bargains and shop around to get them. That’s the central finding of the latest quarterly Consumer View report from the National Retail Federation.

The survey of more than 3,000 American adults found that 89 percent shop at various discount retailers and 63 percent buy more items on sale today than they did five years ago.

Forty-three percent shop at discount grocers such as Aldi, Lidl and others on a weekly basis. Sixty-six percent visit dollar stores at least twice a month and 58 percent go to an outlet store once a month or more.

Clothing and groceries top the list of categories in which consumers shop for deals. Seventy-five percent of those surveyed shop at discounters to buy apparel and 71 percent do the same for groceries.

Age and income are not significant factors when it comes to identifying discount shoppers.

Ninety-three percent of Millennials (born between 1981 and 1994) and Gen Z consumers (1995 and later) that are at least 18 years of age shop for bargains.

Americans across all income levels shop at a wide variety of discounters, according to NRF’s research. Eighty-nine percent of those who make below $50,000 a year buy from discount retailers as do 88 percent of those making up to $100,000 and 90 percent of those making more than that.

“Regardless of income or generation, virtually everyone wants a bargain, whether it’s for everyday necessities or big-ticket splurges” said Mark Mathews, vice president for research and development and industry analysis at NRF, in a statement. “Even those who can afford to shop elsewhere love finding a ‘steal,’ and it’s a habit that’s here to stay.”

America’s love of a great deal, it could be argued, has been around for as long as the nation has existed. But NRF believes that the percentages in its research can be directly traced back to changes in shopping behavior that began during the Great Recession a decade ago.

There are, however, regional differences when it comes to bargain hunters with the biggest percentage (38 percent) living in America’s southern states. Twenty-three percent of shoppers in the West, 21 percent in the Midwest and 18 percent in the Northeast are identified as value shoppers by NRF.

DISCUSSION QUESTIONS: Is the cultural shift in shopping behavior identified by NRF’s research here to stay? Will most, if not all retailers, need to be viewed as a source for deals to achieve continued success going forward?

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Braintrust
"Discount season is now year round. There is always someone selling something for a steal."
"Discount retailers are hot these days and continue to open stores, catering to this cultural shift in shopping behavior that is Millennial-driven..."
"Guess what? You discount your goods and shoppers will expect you to do so going forward. Is this a surprise?"

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25 Comments on "Does anyone pay the full retail price anymore?"


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Bob Phibbs
BrainTrust

Let’s be totally honest here, the reason more shoppers buy on discount is retailers are addicted to giving them.

Tony Orlando
BrainTrust

So true Bob, but you must provide hot deals on the top items, or it simply will not sell. Making money in other areas is the key.

Neil Saunders
BrainTrust

While it is true that everyone would prefer to get a bargain rather than not, we do still pay full price — usually for brands we desire which refuse to discount. Apple is a prime example of this. Lululemon is another. Both have created compelling products and exercise care in their promotional and distribution strategy to retain price integrity.

Jeff Sward
Guest
Of course the shift is here to stay. It’s all part of the race-to-the-bottom mentality. It is now often difficult to say “regular price” without a bit of a smirk. The rise of the outlet malls, the expansion of T.J.Maxx and brethren, the ongoing ubiquity of what was born as the “one day sale” … all of these market dynamics contribute to viewing a “deal” as the new norm. Everlane’s pricing and quality transparency is an attempt to circumvent this thinking, even if I scratch my head at their math sometimes. One way every retailer could avoid some of this thinking is to “create and manage scarcity.” Stop buying so much depth in every customer choice. SELL OUT…!!! Sell out of fun, novelty styles and replace those styles with NEW & DIFFERENT fun and novelty. Create some urgency! Deals and obvious, real value are the path forward. Target’s new private label is a good example. But the tiers of the business from commodity to higher levels of fun, fashion, and novelty still offer opportunities to… Read more »
Dick Seesel
BrainTrust

Bargain hunting is not a new phenomenon, and goes back as far as traditional department stores’ “bargain basements” and big quarterly sales that packed those stores. And (as I mentioned in yesterday’s comment about Sears) the growth of value-oriented stores like Target, Walmart and Kohl’s began over 50 years ago. I’m not sure bargain hunting is an outcome of the Great Recession, or whether retailers responded to tough market conditions by developing promotional cadences that are hard to shake loose.

As Neil points out, there are still retailers who can sell products at regular price — even Nordstrom maintains a selective sale calendar compared to most of its competitors, because it is “selling” newness and customer service alongside merchandise.

Ricardo Belmar
BrainTrust
Who doesn’t love a great bargain? Yes, consumers would rather pay a discounted price than full price on just about anything, but this is because consumers have been trained by so many retailers now for so many years to expect a never-ending supply of sales. Just look at any department store brand — shoppers will only buy from these brands when items are on sale and not full price. That said, there are plenty of examples of brands that command full price because their products are so desirable and because their brands have established a connection with customers that is not based on price but on perceived value. Look at Apple as a prime example as well as many others in the luxury goods segment. The fact is this is another example of why retailers caught in the middle are having the hardest time succeeding. Luxury retailers at the high end can still command a full price and many of them are doing well if they have compelling products. On the other end of the… Read more »
Carol Spieckerman
BrainTrust

Just because someone is shopping at a “discount” retailer doesn’t mean they aren’t paying full price. They’re just paying the full price that aligns with that retailer’s margin structure. So perhaps the bigger shift is the way that retailers are positioning their value propositions. For example, Target focused on the “expect more” side of its brand promise for years then shifted to the “pay less” angle in order to better compete with Walmart, dollar stores and hard discounters. Now it appears to be building out and balancing both sides of the house. Amazon is free to sell across the spectrum from cheap t-shirts to luxury goods and can adjust prices on the fly. Increasingly, retailers are in a position to shape shoppers’ perceptions of value, not just reacting to shoppers’ penchants for it.

Brandon Rael
BrainTrust

Everyone loves a bargain. There certainly is a discount and treasure hunt shopping culture across the department store. Off-price formats are alive and well. We also as a culture have become addicted to price comparisons, and the perceived value savings of Amazon Prime.

However, the luxury apparel, jewelry and electronics segments will always have a strong following which will be more than willing to pay full price. For companies such as Patagonia, Gucci, Apple and other more luxury-focused lifestyle brands, there is a connection between the full priced items and the perception of the value and quality you will be receiving. Luxury brands rarely if ever discount, and the market will remain very healthy for years to come.

Tom Dougherty
BrainTrust

Discounting has always been a slippery slope. Years ago, P&G recognized that when you discount a product the shopper believes that the discounted price is the REAL price. They have been trapped by that consumer belief ever since.

So, does anyone pay full retail price anymore? Not many. And, that trend is not new. It’s just that the retail industry is in such disarray that it is being noticed.

The science of merchandising and retail needs a facelift. OK, maybe a transplant. In an era of information and the ability to price shop in real time, value needs a new definition. “The logical end to defensive warfare is surrender.”— Napoleon

Kai Clarke
BrainTrust

Americans are shopping for bargains because that is what America is built upon. Walmart, Costco, Target, Lidl, Aldi, are all discount retailers in their own right, and some have been around over 50 years! Why pay full price when retailers price match and we have a strong online presence available at any key retailer?

Ian Percy
BrainTrust

I think the whole concept of “full price” is a myth. The smoke and mirrors of retail. What exactly does the word “full” mean? Full of what? I suggest full of wishful thinking. Price is something someone makes up even if they make up a formula for how to calculate it. It isn’t a pre-defined or bound by reality thing. We know exactly what a certain rock weighs in what the world defines as pounds or kilograms. But “price?” It’s the highest amount a manufacturer or retailer thinks will still move product on any given day. As Neil points out, this applies to both luxury and low price brands.

Ray Riley
BrainTrust

The value and quality for the money customers pay has increased exponentially in off-price retail over the last decade. Plus with all retailers’ online efforts assisting in the discovery of these products across social channels, marketplaces and elsewhere — why pay full price? Particularly if you have the time to spend!

Jennifer McDermott
BrainTrust

Discount season is now year round. There is always someone selling something for a steal and savvy shoppers can set their calendars to the type of goods that will be slashed at certain points of the year. As Neil has noted, there are a number of brands that don’t discount without it hurting their bottom line however for the majority, they’ll always close off segments of the market unless they offer periodic deals.

Tony Orlando
BrainTrust
In my business 90 percent to 95 percent of my customers are big -ime bargain hunters, as the grocery business is kinda like Rodney Dangerfield — we get no respect. If you think like it’s the ’80s or ’90s you’re probably out of business, as consumers can find shelf-stable groceries everywhere and making money on these top 300 items is a thing of the past. I’m sure others will say differently and yes, in a resort town or a booming suburb you can increase your retail prices, but in rural towns, forget about it. That also goes for clothing stores, department stores and online, where people can sit and shop till they find the product they want at the lowest price, and wait for the one-day mega sales if needed. Bargain hunting is a sport today, and it takes a lot of talented people to engage bargain hunters when they come into any store. The ones that do it the best will make money and the rest will perish, unless they can run some signature… Read more »
Ralph Jacobson
BrainTrust

Guess what? You discount your goods and shoppers will expect you to do so going forward. Is this a surprise? Today, our culture has only grown toward the need for getting a great price on everything. Kudos to those brands that have refrained from this practice to retain full margin sales.

Karen S. Herman
BrainTrust

Discount retailers are hot these days and continue to open stores, catering to this cultural shift in shopping behavior that is Millennial-driven and stems from the Great Recession and, yes, I believe it is here to stay. Discount retailers are making the in-store experience much nicer that the Ben Franklin stores I grew up with. Today, I am seeing Tuesday Morning opening next to Five Below. Here’s a great strategy that directly caters to this cultural shift and offers value shopping for the whole family.

Evan Snively
BrainTrust

The “58 percent go to an outlet mall once or more a month” stat was pretty eye-opening to me. Yes, we love deals and this mentality that we are all finding diamonds in the rough all the time allows our brain to think “I am so effecient at shopping, I can actually consume more because I am not spending more.” Instead of paying $80 for one shirt (retail) we anchor our spend off that price and buy three shirts that equal $80 — what a deal!

Good for business, but not for the stress it puts on the supply chain and environment.

Ananda Chakravarty
BrainTrust

Amazing how we trick ourselves – that $80 shirt might last more than 3x as long… Have we mixed up our sense of quantity and quality?

Evan Snively
BrainTrust

I am not a minimalist by any stretch of the imagination, but in talking with one in the past he said “everything I own is my favorite, and made to last.” Definitely some insight to be grasped from that.

Seth Nagle
BrainTrust

In-store discounts and email coupons are now just expected from most retailers. The few lifestyle brands and retailers that have a strong shopper base, however, appear to offer fewer sales as their shoppers tend to believe in their cause and are willing to pay top dollar for it.

Today we see retailers like Best Buy and others offer a 14-day price match guarantee program which removes the stress of bargain hunting and now there are even services such as Paribus from Capital One that scans past receipts and sends alert refunds the shopper qualifies for.

David Naumann
BrainTrust

Retailers have trained us well. Almost anything can be found at a discount if you shop around, with the exception of premium brands like Apple, just released auto models that are in limited supply and several luxury brands. Some retailers have taken this to the extreme where virtually every product is sold below list price.

With the expectation of discounts ingrained in our brains, retailers have no choice but to perpetuate the discount pricing model to attract and retain customers. It was a slippery slope that almost all retailers slid down several years ago and there is no climbing back to the top of the slide.

Ananda Chakravarty
BrainTrust
Maybe my thoughts will be against the grain with my colleagues on this thread, but the a whole concept of discounts and pricing is the antithesis of convenience (and to some degree eCommerce). The arbitrary markups, the cost plus pricing, the Pareto curve for price elasticity — all of these suggest that there is a point where customers aren’t in tune with the price point anymore. I believe Ricardo mentioned luxury — great example of where price matters less. There are certainly many bargain hunters who actively seek out better pricing, but there is a cost to hunting through discounts, searching for a coupon, putting your name in a mailing list, or waiting for the mega-sale. Deals are attractive to customers, but the behavior is temporary and customers will mix and match based on their needs at the time — it’s fluid. During my work in the field, we always came up against that question of whether we’re leaving money on the table by offering discounts on certain products. Discounting lowers brand value, increases expectations… Read more »
Craig Sundstrom
Guest

I don’t doubt the premise. I’m one of the large majority who said “more” — but it’s certainly not a new phenomenon. Look through an archive of any newspaper from the last century and it’s filled with ads advertising sales.

But offsetting this, I think, is the corresponding rise of cult-like people who pay a premium to have something first: go to one of those much heralded Apple product debut early AM lines and ask if people still pay full price. Yes, and then some!

Joan Treistman
BrainTrust
The numbers I’d like to see would tell me the percentage of retail revenue that represents discount shopping. If more and more shoppers are buying at discounted prices, that suggests there are more products available at those lower prices. That would feed into the argument of some that retailers can no longer rely on bringing in customers by offering “some” discounts but rather shifting to a “more/more/more” approach. I recall growing up in NYC and knowing I could find current clothing at discounted prices at the manufacturers in the garment center of Manhattan. When I moved to Chicago I was terribly disappointed that this opportunity was missing, except for the occasional sample sale in the Merchandise Mart. Fast forward to outlet malls and widespread sales in department stores and other retailers. It’s hard to avoid a sale these days. And who wants to? RetailWire has addressed this subject before. People would talk about going back to the time before the great discount took over shopping behavior. I can’t see going back. And I believe my… Read more »
Cathy Hotka
BrainTrust

Where I live, TJMaxx is across the street from Neiman Marcus. Guess which one gets the traffic?

wpDiscuz
Braintrust
"Discount season is now year round. There is always someone selling something for a steal."
"Discount retailers are hot these days and continue to open stores, catering to this cultural shift in shopping behavior that is Millennial-driven..."
"Guess what? You discount your goods and shoppers will expect you to do so going forward. Is this a surprise?"

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