Discounting is just not what it used to be. According to new consumer research from First Insight Inc., product quality is more important than price. The technology firm said the results show that price as an influence of discounts on purchase decision has declined.
The research is based on a survey of 1,000 consumers, and generally focused on vehicles, home goods, furniture and electronics.
Greg Petro, chief executive officer and founder of First Insight, said that for years, “consumers have been trained by department stores and mass merchants to focus on finding deals, and many retailers have responded with deep discounts.”
However, Petro said the results of this study “indicate that we may be reaching a tipping point, as retailers who have been focused on providing consumers with the quality, differentiated products they want and the price they expect are gaining greater traction and changing the consumer mind-set. As the pendulum swings away from discounts, retailers have an opportunity to capture greater sales through quality products in every category, from apparel to furniture and appliances.”
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Researchers at the company said 53 percent of respondents rate quality as “the most important factor when making purchases compared to price (38 percent).”
“The report also notes that consumer expectations for discounts are falling as an increasing proportion of consumers surveyed said department store discounts had no influence on expectations for discounts across other categories including vehicles, smartphones, furniture, home appliances and home electronics,” authors of the report said.
First Insight found that furniture and vehicle categories showed “the sharpest percentage change in expectations” compared to the prior survey with the number of respondents “saying discounts had no impact on purchases rising 98 percent and 74 percent, respectively.”
The researchers noted that percentage of men as well as Baby Boomers who reported that discounts do not influence their purchase decisions “more than doubled (111 percent and 128 percent increases, respectively) in the furniture category.” With Millennials, that percentage “nearly doubled,” showing a 94 percent increase from the previous survey.
Other findings include that while the percentage of those survey said “department store discounts were having ‘no influence’ on expectations for discounts in home appliances increased overall, particularly with Baby Boomers (87 percent increase), the percentage of Millennials increased by only three percent.”
In regard to quality and price preferences across generations and gender, First Insight said 54 percent of men and 51 percent of women surveyed “ranked quality as the most important factor when making a purchase.”
“Similarly, more than half of Baby Boomers, Millennials and Generation Xers choose quality over price, with Xers the most influenced by price (41 percent) versus Millennials and Baby Boomers, with 36 percent of both groups saying price was the most important factor,” the company noted.