In the current retail climate, which is fraught with robust competitive forces and looming inflation due to increasing wages as well as trade tariffs, offering products at the right price may make or break the success of that product. And this is especially relevant in price-sensitive categories such as apparel, which is also prone to issues around sizing and in-stock positions.
And this is why Greg Petro, chief executive officer and founder of First Insight Inc., finds his firm’s latest research so startling. A survey of consumers and retail executives revealed a large gap between how shoppers view pricing versus that of retailers.
“And this is important because perception becomes reality,” Petro told attendees.
Petro said the disconnect is the result of rapid changes occurring in the industry. He said the key challenges impacting business are anchored in three main areas: people, product and process/technology. The ceo suggested that aligning all three with strategies centered on leveraging “voice of the consumer” and other data-driven technologies could fuel success.
Petro said the “pricing perception disconnect” plays out in regard to adopting or not adopting various technologies. For example, the survey revealed that 59 percent of consumers are using smart speakers for researching products and pricing. Yet nearly none of the executives polled said smart speakers were a priority or was having an impact.
Moreover, the survey showed that the number of consumers owning smart speakers is on an upward trajectory. Petro said this is great news if you’re a brand with high online recognition. But if the brand is not pegging the needle on contextual search, it’s in trouble, he added.
As a result, Petro stressed the need for retailers and brands to “listen to the consumer” as well as invest in new technologies. Petro said “retailers need to embrace a new skill set today. And they need to use technology in a way that keeps up with consumers.”
Other key findings of the First Insight report, which Petro said was available to attendees, showed that retail executives and consumers both cited “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 survey also showed that while 20 percent of executives felt consumers believed prices were increasing online, more than half of the shoppers themselves felt that way. And 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,” Petro said.
First Insight’s research showed 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.
The survey found that just 12 percent of retail executives “ranked these factors as important to consumers.”
Petro said while “everyone agrees that quality of products is the most important factor in purchase decisions right now, the data shows consumers are more concerned with pricing than many senior decision makers in the retail industry suspect.”
The sensitivity on pricing and the disconnect in perception will only intensify and create more challenges for brands and retailers, Petro predicted, as issues such as the recent trade tariffs force inflationary pricing trends on products.
“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,” he noted.