Haggling Makes a Comeback
By Tom Ryan
With consumers gaining leverage in a ruthless economy, haggling is on the rise
in the U.S. And at the risk of losing sales, some smaller stores are developing
strategies to capitalize on the practice.
According to America’s Research Group survey, 72.2 percent of consumers haggled
for lower prices over the past holiday season, and of that group, 80 percent
reported being successful. Two years ago, 61 percent tried to negotiate, and
only 50 percent of them succeeded.
“People have had markdowns thrown in their face so often they expect them,” Martin
Lindstrom, author of Buyology – Truth and Lies About Why We Buy, told Crain’s
New York. “Consumers have just gone through a one-year training session. At the
end of the day, it’s not the price per se, it’s the concept. It’s an addiction.”
Mr. Lindstrom said that if managed wisely, savvy haggling can save a sale from
walking out the door. Also, since big-box retailers aren’t set up for on-the-spot
pricing, it can be a differentiator.
“It gives the little guy a leg up on the big boys,” said Mr. Lindstrom. “It’s
absolutely a strength of the smaller, independent retailer.”
The challenge is that unlike many other parts of the world, sales associates
in the U.S. aren’t used to haggling. According to the Crain’s article, the goal
for sales associates is to make shoppers feel like they received a bargain while
the store still gains an adequate margin. Prices may need to be raised or markdowns
reduced throughout the store to provide associates with the leeway to reduce
The overall haggling strategy varies by customer, and stores should be prepared
to let a haggler walk.
“You always have your rock-bottom price,” Joe Sundlie, an owner of an upscale
vintage clothing store in Manhattan’s Flatiron District, told Crain’s. “Price
the tag so you can allow yourself to drop it twice. They wait for the trump card,
and that’s your second price.”
Bob Grayson, former CEO of Limited Stores and now a retail consultant, believes
all stores in all likelihood make less money by haggling versus set pricing.
“If you would normally have come back with a lower price and your profit allows
it, go ahead,” said Mr. Grayson. “But to make spot decisions is not a good idea.”
Questions: Is haggling a good option for stores?
In what situations do you think it’s appropriate? Do you agree that haggling
could be a differentiator for small stores against big box chains?