Women in Search of Deals
By George Anderson
Christine Bright, an industrial engineer supervisor for United Parcel Service, sums it up. “Everyone loves a bargain. I don’t pay full price unless I absolutely need it.”
According to a study by the Frank About Women market research firm, women today are concerned about the economy and, as a result, are doing more comparison-shopping and bargain hunting than in the past.
Not surprisingly, more women are turning to the internet to conduct comparison-shopping expeditions before heading to a store to buy. The reverse, it turns out, is also true. Women are going to the store to get real world prices before turning to the virtual one to make purchases.
For many women, shopping is a recreational experience. In simple terms, they go shopping because it makes them feel better.
About 42 percent of women shop to feel better, according to Frank About Women’s research.
Liz Rucinski, a homemaker, told Business First of Louisville, she “shops the outlet stores near Columbus, which sometimes have sales at Lenox or Talbots,” on her way to visit family in Cleveland. “My next plan is to go to Chicago on a shopping trip with my daughter,” she said.
Moderator’s Comment: Are women more price conscious today than they have in recent years? How do retailers maintain
acceptable margins in a super competitive bargain-hunting environment? –
George Anderson – Moderator
None of us can refute the impact which the Internet has had on our shopping behavior. The process of disintermediation has made e-shopping very price competitive, along with the growth of shopping ‘bots like Froogle, MySimon, NextTag, Bizrate and others. This has transferred to the Brick and Mortar retail shopping experience where many shoppers either shop online then buy onground or the opposite. All of us would rather avoid the problems and enjoy the pleasures, while saving money. Better yet, we can often have our products delivered for free. Despite the article’s basis of “being concerned for the economy,” this is simply a reflection of the changing behaviors of shopping in the Internet age.
Am I missing something here? My take on this is:
1. We are indisputably in the information age. One clear aspect of that is easier, faster, and more reliable access to information. Pricing is a facet of product information.
2. The ability to compare pricing is a demonstrated need that consumers value. Business models now exist providing this service and supporting themselves through advertising.
3. The basis of comparative pricing is that the product or service is essentially an easily or quickly understood commodity, where differences, if any, are easily understood and factored into the price-value equation.
Given all of this, the answer to the second half of the question seems two fold.
1. Do as much as you can to provide differentiated or difficult to compare product. Package size variants and bundling are old and tired methods. Private label is poorly executed and usually begun in the very commodities which don’t lend themselves to differentiation in the first place. But it can and should be done. Shop Williams Sonoma. Try to price compare. It takes a lot of effort.
2. Focus on the entire value proposition, not just the price, in all forms of marketing or segment positioning. Prosaically, I will only shop Kmart if I know their price on something is less that Target’s. However, I will pay more on the whole from Target because I enjoy the experience more.
Price is not and never will be the sole determinant of channel choice. For a very small segment of the population, price is the dominant and primary decision variable. Compete for that group if you’d like, but you’d better be the most efficient operator with the most efficient supply chain. Otherwise, find groups of customers with blends of needs, and fill those. You can charge slightly more, and probably, manage your margins better.
I may be the dissenting voice here, but yes, women (and most everyone else) are bargain oriented and nothing gave me more of a thrill than the pair of Stuart Weitzman’s I got for $19.99. But look at the strong performance that that the luxury market has experienced. There is still something to be said for the importance of prestige.
I think what you see more of these days is that the same woman who once shopped exclusively at Nieman’s or another luxury retailer will now go pick up her layering tank tops at Target. In the not too distant past, I think that would have been unheard of.
No one seems to have addressed the part of the question about retailers manage to maintain acceptable margins. Somehow I would guess that Race, if he chimes in, might have an idea of the answer. My own guess would be another question – do prices get marked up just in order to get marked down? In England, when something is put “on sale,” there must be evidence of which branch of the chain formerly sold it for the higher price; I think they have to prove that it was sold at that higher price within the past 28 days, thereby assuring customers that the reduction is genuine. Other shops may use the wording “special purchase” which means that the item is always sold at a low price. Do you have such rules? Do retailers have to demonstrate that there is a reason why products are cheap or cheaper? The “everybody loves a bargain” mentality has lead to expectations of low prices and demands that everyone meets everyone else’s lowest offer. How do retailers manage to make money in that sort of climate unless they artificially hike the “original” price?
I believe American consumers are growing generally more value conscious over time, due to a confluence of cues from the marketplace. Choice is abundant, comparative information is easier than ever to obtain, and shoppers want to feel like winners, not patsies, on the way home from the mall.
This phenomenon is not a confined to women. Plenty of men check out product features in stores for major purchases like televisions, then go home and search the Web for the best deal on a desired model. There is an underlying gamesmanship to this behavior – within a reasonable degree of effort, consumers want to obtain a price advantage on their purchases.
Over time, market experience trains shoppers to find their best values. That may mean the absolute lowest price in the market on some purchases, or a luxurious purchase experience on others. In general, these experiences make shoppers more savvy, more demanding and sometimes more cynical in their buying behaviors. Retailers must constantly refresh their offerings to keep pace.
That story could have been written about any group. Go back and re-read that story. Then take out the word “women” and replace it with “people,” “men,” “children,” “African Americans,””wealthy,” “low income,” or “Eskimos.” Does the story still make sense?
I believe that everyone — consumers and retailers — are looking for great deals, which is why our trade show and the off price sector continues to do well. Mom and Pop retailers need the deals to improve their profit margins and compete against the big off price players. The big off price players compete against each other, and female and male consumers enjoy the hunt wherever they shop.
The internet’s relentless 10 year “save money” message has been permanently imprinted in the brain of every person in America with access to a computer. It’s true that not everyone is more price-conscious, but certainly the overwhelming majority of both genders are extremely price-oriented. What merchandise category or service cannot be price-shopped using the internet?
I would say that I am more price-conscious than ever and I have to give most of the credit to Wal-Mart and a smidge to Target. Once I found my favorite green tea at Wal-Mart for $1.00 less – slightly shorter trip to Whole Foods…once I found great-fitting Levi’s at Wal-Mart, can’t justify designer denim…and now that Target(dot com in particular) offers such great office furniture and decorative items…well, you get the picture. That isn’t to say that I’m on any kind of budget when it comes to cosmetics, suits and travel, however, I have developed a nice case of selective price resistance over the past few years that is always in danger of getting worse.