Apparently, shoppers’ views of price points are completely different from those of the executive leaders behind the brands and products they buy.
Research released today at the WWD Apparel and Retail CEO Summit by technology solution provider First Insight Inc. reveals that there’s a “significant disconnect between senior retail executives and consumers” regarding low prices. Authors of the report said, as a result, retailers are underestimating the importance of in-store discounts and pricing strategies. The research also reveals insights into other consumer behavior preferences, such as the use of mobile devices.
First Insight surveyed shoppers and senior retail executives about the shopping habits of consumers as well as their purchasing behavior along with the influences driving their buying decisions. While the survey found that both groups “named quality as the most important factor in purchase decisions (roughly 50 percent of both sets of survey respondents), only 20 percent of senior retail executives felt low pricing ranked as most important, compared to nearly 40 percent of consumers.”
The company said the study also shows a “significant perception gap” between retailers and shoppers in regard to the “current pricing landscape.” The poll showed that while 20 percent of executives felt consumers “believed prices were increasing online,” more than half of the shoppers themselves felt that way.
“The same percentage [20 percent] of senior retail executives also felt consumers believed that prices were increasing in-store, compared to 60 percent of consumers,” the company noted.
Overall, the research puts a spotlight on the importance of pricing and price-point sensitivity with consumers. Greg Petro, chief executive officer and founder of First Insight, said while “everyone agrees that quality of products is the most important factor in purchase decisions right now, these data show consumers are more concerned with pricing than many senior decision makers in the retail industry suspect.”
The ceo noted that the impact of this disconnect “will only continue to grow as prices rise due to tariffs. Retailer and brand decision-makers need to understand consumers’ perceptions to ensure they are able to continually attract today’s consumers with the right price-value equation.”
Other insights culled from the survey include the role of technology. Eighty percent of executives polled said mobile technology was having the “greatest impact” on their business. But nearly none of them said smart speakers were having an impact. “Meanwhile, the number of consumers who said they own smart speakers was up 75 percent to 42 percent of respondents when compared to a similar survey last December,” First Insight said. “The majority of consumers who own smart speakers are using them to research prices [59 percent], a significant increase from December [49 percent].”
Drilling down into more data from the report found that 36 percent of consumer respondents ranked better pricing, the availability of coupons and price promotions as the top three factors that drive them to shop in a physical store over shopping online. But the survey found that just 12 percent of retail executives “ranked these factors as important to consumers.”
There was somewhat of an agreement regarding the single most important factor in shopping in a physical store. The poll showed that both consumers and retail executives agreed that “being able to see, touch and feel the product ranked the most important [36 percent by consumers, and 44 percent by executives].” And the ability to take a product home immediately was cited as a top-three factor by 41 percent of shoppers and 59 percent of executives.
The report also noted that 70 percent of retail executives felt that shoppers make more purchases in a store than they do online, while 60 percent of consumers said purchases are made in-store compared to 40 percent done online.
With mobile devices, 78 of the executives believed that shoppers were using mobile devices to shop “occasionally to very frequently [six or more times a month].” This compares to 47 percent of consumers who reported shopping at that frequency. The report also found that the rate of consumers making buys online per month is increasing as compared to First Insight’s prior research.
Lastly, 59 percent of retail executives cited “voice of the customer analytics” as among “the most transformative” to business with another 49 percent naming predictive analytics. The poll found that 46 percent of executives are planning — in the next 12 months — to make investments in voice of the consumer types of analytics while 63 percent are doing so with predictive analytics.