March 26, 2015
Can retailers get the discount monkey off their backs?
Retailers might as well face the facts — consumers are addicted to deals. The equally troubling truth is that retailers too are addicted and the habit is doing damage to many of their bottom lines. According to a piece in The Washington Post, merchants are once again trying to break the discounting habit. Whether it will ultimately set them free or lead to top and bottom line pain remains to be seen.
A number of retailers including Express, Neiman Marcus, New York & Co., Quiksilver and Vera Bradley, according to the Post, are planning to dial back on the depth of their discounting and number of promotions. The hope is the combination of a recovering economy and offering the right products will mean consumers begin to reduce price as a point of emphasis in their purchasing decisions.
Cutting back on promotions does not mean the end of deals for consumers, but retailers are likely to tinker with different kinds of deals, such as those limited to specific categories or perhaps those targeted based on past purchases, to drive revenues and clear shelves and racks of excess inventory.
While pledging to refrain from frequent 40 percent-off deals, merchants will no doubt remain cautious as they proceed. There are examples of retailers that stuck to a strict pricing strategy in the past — Abercrombie & Fitch and J.C. Penney come immediately to mind — that hurt their respective results. Even Macy’s found it had to ramp up promotions following complaints from customers at department stores it acquired from May Department Stores in 2005.
There is some research to support retailers that choose to rely more on full-price sales, particularly as it relates to acquiring new customers.
According to a study released by Coherent Path in December, online customers who purchase products on discount are 50 percent less likely to return to the site to make a second purchase. Those who visit a site and pay full price are twice as likely to return a second time.
"Our data shows that when price plays a significant role in the first-time purchase with a retailer, even online, the chance of them becoming a long-term and loyal customer can be low," said Dr. Greg Leibon, CTO of Coherent Path and a resident scholar in mathematics at Dartmouth.
BrainTrust
Recent Discussions
Discussion Questions
Do you think retailers on the whole have taken discounting too far and need to dial back? How would you advise chains to make the transition?
Poll
I do indeed think they have taken it too far. Dialing back, however, is not going to be so easy. They have lots of co-dependents now — consumers.
As they say in AA, the first step to recovery is admitting you have a problem, rather than blaming everyone else.
Our data continues to report that retailers perceive price as their most important lever. Even Nordstrom has finally joined in the fray (adding more promotions besides their “semi-annual event.”)
The companies listed in the article have a value proposition beyond “lowest price.” I do hope they are able to hold back. I also fear that as long as we have Walmart and Amazon, consumers will be reminded that price is a lever, and the endless saga will continue.
That’s how co-dependency works.
I agree that retailers need to do brand-building on the basis of merchandise content, customer service and loyalty marketing (benefit-driven, not price-driven). But I don’t see much evidence to back up the Washington Post’s premise that stores’ promotional cadence is losing any steam. Judging from our mailbox and email offers, there are plenty of retailers (Macy’s, Kohl’s, J.C. Penney and just about any specialty store you can name) continuing to drive promotional sales with extra coupons on top of other sale offers.
There are two bigger questions that retailers need to grapple with: First, is price a sustainable loyalty driver? (I’d argue no, because somebody can always beat you on price.) Second, does the store’s expense structure provide enough breathing room for the promotional impact on gross margins?
The recent results of JCP and Kohl’s provide a good contrast: Both operate with a similar promotional cadence and both stores’ gross margins are in the same ballpark, too. The difference is that Kohl’s has a far leaner expense structure than J.C. Penney and delivers a better operating profit as a result. So the real “sustainability” question surrounding discounting comes down to whether a store’s overall operating discipline can support it.
Based on consumer demand, or lack thereof, retailers went on a multi-year discounting binge. It’s going to be very difficult to dial it back. Consumers expect discounts and with competitors just a click away will quickly seek them out. Retailers can feed this insatiable appetite for deals by selectively discounting, creating value bundles that have high perceived values and featuring exclusive products at full price. This is not going to be an easy transition. Many, if not most, consumers are still suffering from the Great Recession. Wages have not come back and buying power is still tenuous. Retailers need to proceed cautiously when looking to reign in deals.
In my Introduction to Sales courses the paradox of shopping priorities was disclosed in a rather elementary fashion. The instructor proclaimed that all qualified shoppers are on the hunt for price, quality and service and these procurement priorities seldom, if ever, change. Immediately after the purchase, the ownership priorities—service, quality and what was spent take over in this order of importance.
There are many takeaways from this lesson but you must own the fact that when someone is buying something price is very important and must be properly dealt with. There are and have been many experiments with one-price selling policies with poor to disastrous results. Dollar stores, Aldi and J.C. Penney come to mind quickly as I ponder these experiments. Today it is fair to say that there are no outstanding results in these efforts. Lots of opportunity with very large investment requirements, but not much in terms of new and innovative ideas is the rule of order here. What might be a more appropriate investment which also has a need for far fewer front-end dollars is finding success with all of the new and largely unexplored 21st century selling tools.
Discounting is an addictive strategy. Addicting to both shoppers and retailers alike. It is also a very easy strategy to implement to create short-term financial results. Unfortunately, as the research suggests, it doesn’t seem to translate to long-term customers or brand benefits.
The challenge for both retailers and brands is how to break the addiction to the sale. The shadow over any initiative is time: Time measured by quarterly financial results. It will be difficult to implement any recovery or sobriety plan under the financial microscope that expects rapid results.
Building a customer for life requires incredible focus and commitment over the long haul. If you look at the list of the 11 companies that made the grade in Jim Collins’ best selling book “Good to Great,” none of those companies built their businesses on the backs of discounting. I still maintain that investing in the customer and their emotional experience with you and your brand will always win the day. It’s clearly the most difficult to manage and maintain but it is the most viable and rewarding strategy.
Focusing on price as a differentiator is not only deleterious to brand image it is a sure fire way to put yourself out of business. But at the end of the day it’s easy for brands to think that it’s the only thing that their customers think about.
And there’s the thing. Maybe the customers they have attracted with their constant discounting are only attracted by discounts. The trouble with those customers is that they are neither profitable nor loyal.
The answer for those that can’t make it competing against Amazon and Walmart is to up their value proposition by offering products and an experience worth the full-price spend.
When customers put a retailer on their list to visit during a shopping trip, the last thing they need is to be disappointed by their experience. Out-of-stocks, non-existent service and in the case of apparel a lousy fitting room experience make the customer wonder why they bothered and mentally cross the retailer off the list for future trips.
Want some data that supports this? Look no further than profitable repeat sales. If a discount-driven retailer can say yes to that, then no changes are needed.
Shoppers have been seeking deals since the first peasant haggled with a merchant in a bazaar. That behavior will never stop. The only thing that will limit consumers’ willingness to pursue deals is the extent to which they are available.
So retailers have to a.) all act in unison of good faith and accord and not succumb to the urge to take “just a little” competitive advantage (good luck with that one), or b.) pray for some sort of government intervention and regulation. (There’s a reason the tobacco companies all smiled inwardly when television advertising was regulated out of their marketing budgets!)
This question comes up a lot, and for my business there has to be exceptional value on our staples or I am going to be looking for a new line of work. Discounting is never going away, but in some ways it makes me sharper knowing that if we don’t do our job well, and give great service, we will perish.
If we are being honest here, how many of my fellow panelists enjoy paying full price? I believe we all know the answer to that. So we can blog all we want on how to change it, and YES we can alter our style of promotions, but don’t believe for one second that the consumers aren’t looking for a killer deal on everything they consume, especially food.
There are ways to build profits, and you all know how I have preached about building the perimeter of the store with homemade signature foods and premium value-packed meat deals. This for me personally is how I bring customers to my store, and I would be kidding myself to think I can charge more than 99 cents for Kraft macaroni and cheese, as it would never sell. No one in business is immune from thinking people will shop their business exclusively because they love you, but if you’re not willing to rethink how you do business, it will eventually fail.
Brick-and-mortar will never go away, but the online business will continue to challenge us in ways our competitors in years past could never do. Seek out your strengths, hire the right people and fulfill the promise of top quality merchandise sprinkled with some killer deals and incredible service, and you just may survive or actually even thrive. It won’t be easy though, as the customers (all of us) are always going to expect a great deal, no matter what.
That ship has sailed. List prices are largely bogus. Oddly enough the retailer knows it and the consumer knows it too. A very large portion of sales are impulse buys. A consumer making an impulse buy figures if it’s on sale then the price they are getting is at least OK. Less promotion is not happening.
I didn’t feel inclined to respond here until I read Tony’s contribution. His response could not have been put more wisely or succinctly. I only wish I could have endorsed him more than once.
We tend to equate “a deal” with the level of discount from MSRP or what the customer “thinks” is the “real” price. So where does the MSRP come from? Just like financial projections in a startup’s business plan, someone just makes it up. Oh, in manufacturing we try to justify it by having a formula of four times or 10 times the total cost of goods. Then out of that each player takes their bit. But basically someone makes it up.
My point is the pricing (aka discounting) process is a strange blend of the objective and the subjective. Two bags can be made from the same cow hide and one can have an MSRP of $3,000 and one of $30. They can even look alike. So why on earth would someone pay the higher price?
The missing ingredient in pricing is another “D” word—desire. How do you create desire so you don’t have to rely so much on discount to drive consumer behavior? That’s what good branding does.
Back to Tony. It seems to me his displays of homemade goods and premium meats around the perimeter of his store are creating desire. Smart move.
There’s a Twitter account called “The Answer is No.” The premise is that for any headline written in the form of a question, the answer is always “no,” because if the answer were provably “yes,” the headline would be a statement instead of a question. Here too, the answer is no.
That said, there is no question that a large percentage, probably over half, of retail promotions do not generate incremental profit. There are many opportunities to mine promotion data much more effectively to find the trends of what works and what doesn’t, and to leverage that insight in conversations with vendors. At APT, we’ve started to see more sophisticated retailers using analytics much aggressively both in promotion strategy and in the week-by-week promotion planning process. Done correctly, it is worth a lot of money and is hard for less sophisticated competitors to replicate.
Retailers may have embraced some bad habits over recent years but let’s not forget the consumer. This just goes to show that consumers don’t seem to care as much if they buy something “top of season,” which is when you typically pay full price. They are willing to wait for reductions.
This also supports that statistic that those who pay full price are twice as likely to return. Duh. If they are willing to pay full price, this is the situation where “top of season,” newest, etc. makes a difference to them.
While not every retailer can be that kind of brand, it is certainly worth a look to see what categories may qualify. Can they do more exclusives? If not, it’s time to rethink the corporate structure and strategies.
For my 2 cents.
There is no transition. There is, however, merchandising; understanding the game, your customers and product mix.
The path to the register was never supposed to be simple.
I think too many retailers lose their nerve in the markdown game and wind up ceding margins unnecessarily. Markdown optimization combined with a omnichannel virtual inventory might provide the necessary courage. This creates opportunities to increase sell-through, balance store demand, and take later, shallower closeouts. Shoppers will still find a few “steals” late in the season, but they’ll also learn to snap up desirable items while they’re still available at full or near-full price.
Sorry, but retailers don’t make the rules. The 40% Off is due to cash being tied up in inventory that isn’t selling. It’s an investment with no return. When retailers figure out how to better determine the customer’s desire and buy merchandise that turns then discounts will decrease. For now, they have to get some money out of their inventory so they can reinvest in new inventory that might provide some margin. The only real way to transition out of the discount cycle is to know their customers better and invest in inventory that turns.
My first thought was, “They made their bed and they have to sleep in it.”
Retailers have been giving discounts and sales to the point that the customer expects it—and will even wait because they know they are coming. They have trained the customer to expect the discount. They have created price-sensitive consumers.
How to make a transition back to “retail”? It must be done slowly and carefully. The retailer will lose the low-priced shopper. If price is the only thing keeping the consumer loyal, then he/she will go to whatever retailer offers the lowest price.
The best thing a retailer can do is to prove such value through service, expertise, etc., that the price becomes less relevant. That is what the best companies do.
I think retailers are just providing what they think shoppers want and shoppers are definitely swayed by sales.
After getting used to low prices, shoppers will need to adjust to prices that aren’t constantly slashed down to a lower one. Retailers have to provide added value in some other form. The issue here is that retailers will have to step up their game in one or more ways in order to keep shoppers checking out.
Here are a few ways to accomplish this:
1. More targeted advertising to acquire new customers that will buy items at full price
2. Better customer service
3. Personalized experiences and offers
4. Free shipping and BOPIS
5. Stronger brand value driven by high quality products
At this point the issue is consumers are addicted to discounting and they expect it. Retailers have created the expectation to compete on price and discounting is like a drug to push short term sales and traffic. The only way to transition is to make sure the discounting is manageable in terms of margin erosion. Last thing you want to do is to discount yourself out of business.
Personally, I don’t think retailers have a discount monkey on their backs—they’ve got it in their heads. And it comes from several sources:
1. They are not salesmen, but merchant warehousemen, to whom shopping is all about the price.
2. They believe that shoppers are as obsessed about prices as they are.
3. There is a small percentage of shoppers who, as the old saying goes, “Know the price of everything, and the value of nothing.” For these, it IS all about price, and you should hope and pray that these shoppers move to your competitors. STOP allowing them to confirm your own misguided thinking.
I provided 3 links to further evidence yesterday: Glen Terbeek,s Agentry Agenda; The Harvard Business Review’s “Mind Your Pricing Cues,” and my own parsing of the three components of price, “Evolving Brands and Retailers.”
None of this is intended to say a fair price IMAGE is not essential, nor that, as Sam Walton did in the early days of Walmart, retailers ought not scour the land for great deals at wholesale, to keep their prices down. But as long as their major source of profits is their brand suppliers, the idea that they are running their stores for the benefit of their shoppers, is a fiction, making them vulnerable to someone who really is putting the shopper first. This is the REAL vulnerability of bricks-and-mortar retailing to Amazon, not something about the mechanics of display and delivery, offline vs. online.
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I do indeed think they have taken it too far. Dialing back, however, is not going to be so easy. They have lots of co-dependents now — consumers.
As they say in AA, the first step to recovery is admitting you have a problem, rather than blaming everyone else.
Our data continues to report that retailers perceive price as their most important lever. Even Nordstrom has finally joined in the fray (adding more promotions besides their “semi-annual event.”)
The companies listed in the article have a value proposition beyond “lowest price.” I do hope they are able to hold back. I also fear that as long as we have Walmart and Amazon, consumers will be reminded that price is a lever, and the endless saga will continue.
That’s how co-dependency works.
I agree that retailers need to do brand-building on the basis of merchandise content, customer service and loyalty marketing (benefit-driven, not price-driven). But I don’t see much evidence to back up the Washington Post’s premise that stores’ promotional cadence is losing any steam. Judging from our mailbox and email offers, there are plenty of retailers (Macy’s, Kohl’s, J.C. Penney and just about any specialty store you can name) continuing to drive promotional sales with extra coupons on top of other sale offers.
There are two bigger questions that retailers need to grapple with: First, is price a sustainable loyalty driver? (I’d argue no, because somebody can always beat you on price.) Second, does the store’s expense structure provide enough breathing room for the promotional impact on gross margins?
The recent results of JCP and Kohl’s provide a good contrast: Both operate with a similar promotional cadence and both stores’ gross margins are in the same ballpark, too. The difference is that Kohl’s has a far leaner expense structure than J.C. Penney and delivers a better operating profit as a result. So the real “sustainability” question surrounding discounting comes down to whether a store’s overall operating discipline can support it.
Based on consumer demand, or lack thereof, retailers went on a multi-year discounting binge. It’s going to be very difficult to dial it back. Consumers expect discounts and with competitors just a click away will quickly seek them out. Retailers can feed this insatiable appetite for deals by selectively discounting, creating value bundles that have high perceived values and featuring exclusive products at full price. This is not going to be an easy transition. Many, if not most, consumers are still suffering from the Great Recession. Wages have not come back and buying power is still tenuous. Retailers need to proceed cautiously when looking to reign in deals.
In my Introduction to Sales courses the paradox of shopping priorities was disclosed in a rather elementary fashion. The instructor proclaimed that all qualified shoppers are on the hunt for price, quality and service and these procurement priorities seldom, if ever, change. Immediately after the purchase, the ownership priorities—service, quality and what was spent take over in this order of importance.
There are many takeaways from this lesson but you must own the fact that when someone is buying something price is very important and must be properly dealt with. There are and have been many experiments with one-price selling policies with poor to disastrous results. Dollar stores, Aldi and J.C. Penney come to mind quickly as I ponder these experiments. Today it is fair to say that there are no outstanding results in these efforts. Lots of opportunity with very large investment requirements, but not much in terms of new and innovative ideas is the rule of order here. What might be a more appropriate investment which also has a need for far fewer front-end dollars is finding success with all of the new and largely unexplored 21st century selling tools.
Discounting is an addictive strategy. Addicting to both shoppers and retailers alike. It is also a very easy strategy to implement to create short-term financial results. Unfortunately, as the research suggests, it doesn’t seem to translate to long-term customers or brand benefits.
The challenge for both retailers and brands is how to break the addiction to the sale. The shadow over any initiative is time: Time measured by quarterly financial results. It will be difficult to implement any recovery or sobriety plan under the financial microscope that expects rapid results.
Building a customer for life requires incredible focus and commitment over the long haul. If you look at the list of the 11 companies that made the grade in Jim Collins’ best selling book “Good to Great,” none of those companies built their businesses on the backs of discounting. I still maintain that investing in the customer and their emotional experience with you and your brand will always win the day. It’s clearly the most difficult to manage and maintain but it is the most viable and rewarding strategy.
Focusing on price as a differentiator is not only deleterious to brand image it is a sure fire way to put yourself out of business. But at the end of the day it’s easy for brands to think that it’s the only thing that their customers think about.
And there’s the thing. Maybe the customers they have attracted with their constant discounting are only attracted by discounts. The trouble with those customers is that they are neither profitable nor loyal.
The answer for those that can’t make it competing against Amazon and Walmart is to up their value proposition by offering products and an experience worth the full-price spend.
When customers put a retailer on their list to visit during a shopping trip, the last thing they need is to be disappointed by their experience. Out-of-stocks, non-existent service and in the case of apparel a lousy fitting room experience make the customer wonder why they bothered and mentally cross the retailer off the list for future trips.
Want some data that supports this? Look no further than profitable repeat sales. If a discount-driven retailer can say yes to that, then no changes are needed.
Shoppers have been seeking deals since the first peasant haggled with a merchant in a bazaar. That behavior will never stop. The only thing that will limit consumers’ willingness to pursue deals is the extent to which they are available.
So retailers have to a.) all act in unison of good faith and accord and not succumb to the urge to take “just a little” competitive advantage (good luck with that one), or b.) pray for some sort of government intervention and regulation. (There’s a reason the tobacco companies all smiled inwardly when television advertising was regulated out of their marketing budgets!)
This question comes up a lot, and for my business there has to be exceptional value on our staples or I am going to be looking for a new line of work. Discounting is never going away, but in some ways it makes me sharper knowing that if we don’t do our job well, and give great service, we will perish.
If we are being honest here, how many of my fellow panelists enjoy paying full price? I believe we all know the answer to that. So we can blog all we want on how to change it, and YES we can alter our style of promotions, but don’t believe for one second that the consumers aren’t looking for a killer deal on everything they consume, especially food.
There are ways to build profits, and you all know how I have preached about building the perimeter of the store with homemade signature foods and premium value-packed meat deals. This for me personally is how I bring customers to my store, and I would be kidding myself to think I can charge more than 99 cents for Kraft macaroni and cheese, as it would never sell. No one in business is immune from thinking people will shop their business exclusively because they love you, but if you’re not willing to rethink how you do business, it will eventually fail.
Brick-and-mortar will never go away, but the online business will continue to challenge us in ways our competitors in years past could never do. Seek out your strengths, hire the right people and fulfill the promise of top quality merchandise sprinkled with some killer deals and incredible service, and you just may survive or actually even thrive. It won’t be easy though, as the customers (all of us) are always going to expect a great deal, no matter what.
That ship has sailed. List prices are largely bogus. Oddly enough the retailer knows it and the consumer knows it too. A very large portion of sales are impulse buys. A consumer making an impulse buy figures if it’s on sale then the price they are getting is at least OK. Less promotion is not happening.
I didn’t feel inclined to respond here until I read Tony’s contribution. His response could not have been put more wisely or succinctly. I only wish I could have endorsed him more than once.
We tend to equate “a deal” with the level of discount from MSRP or what the customer “thinks” is the “real” price. So where does the MSRP come from? Just like financial projections in a startup’s business plan, someone just makes it up. Oh, in manufacturing we try to justify it by having a formula of four times or 10 times the total cost of goods. Then out of that each player takes their bit. But basically someone makes it up.
My point is the pricing (aka discounting) process is a strange blend of the objective and the subjective. Two bags can be made from the same cow hide and one can have an MSRP of $3,000 and one of $30. They can even look alike. So why on earth would someone pay the higher price?
The missing ingredient in pricing is another “D” word—desire. How do you create desire so you don’t have to rely so much on discount to drive consumer behavior? That’s what good branding does.
Back to Tony. It seems to me his displays of homemade goods and premium meats around the perimeter of his store are creating desire. Smart move.
There’s a Twitter account called “The Answer is No.” The premise is that for any headline written in the form of a question, the answer is always “no,” because if the answer were provably “yes,” the headline would be a statement instead of a question. Here too, the answer is no.
That said, there is no question that a large percentage, probably over half, of retail promotions do not generate incremental profit. There are many opportunities to mine promotion data much more effectively to find the trends of what works and what doesn’t, and to leverage that insight in conversations with vendors. At APT, we’ve started to see more sophisticated retailers using analytics much aggressively both in promotion strategy and in the week-by-week promotion planning process. Done correctly, it is worth a lot of money and is hard for less sophisticated competitors to replicate.
Retailers may have embraced some bad habits over recent years but let’s not forget the consumer. This just goes to show that consumers don’t seem to care as much if they buy something “top of season,” which is when you typically pay full price. They are willing to wait for reductions.
This also supports that statistic that those who pay full price are twice as likely to return. Duh. If they are willing to pay full price, this is the situation where “top of season,” newest, etc. makes a difference to them.
While not every retailer can be that kind of brand, it is certainly worth a look to see what categories may qualify. Can they do more exclusives? If not, it’s time to rethink the corporate structure and strategies.
For my 2 cents.
There is no transition. There is, however, merchandising; understanding the game, your customers and product mix.
The path to the register was never supposed to be simple.
I think too many retailers lose their nerve in the markdown game and wind up ceding margins unnecessarily. Markdown optimization combined with a omnichannel virtual inventory might provide the necessary courage. This creates opportunities to increase sell-through, balance store demand, and take later, shallower closeouts. Shoppers will still find a few “steals” late in the season, but they’ll also learn to snap up desirable items while they’re still available at full or near-full price.
Sorry, but retailers don’t make the rules. The 40% Off is due to cash being tied up in inventory that isn’t selling. It’s an investment with no return. When retailers figure out how to better determine the customer’s desire and buy merchandise that turns then discounts will decrease. For now, they have to get some money out of their inventory so they can reinvest in new inventory that might provide some margin. The only real way to transition out of the discount cycle is to know their customers better and invest in inventory that turns.
My first thought was, “They made their bed and they have to sleep in it.”
Retailers have been giving discounts and sales to the point that the customer expects it—and will even wait because they know they are coming. They have trained the customer to expect the discount. They have created price-sensitive consumers.
How to make a transition back to “retail”? It must be done slowly and carefully. The retailer will lose the low-priced shopper. If price is the only thing keeping the consumer loyal, then he/she will go to whatever retailer offers the lowest price.
The best thing a retailer can do is to prove such value through service, expertise, etc., that the price becomes less relevant. That is what the best companies do.
I think retailers are just providing what they think shoppers want and shoppers are definitely swayed by sales.
After getting used to low prices, shoppers will need to adjust to prices that aren’t constantly slashed down to a lower one. Retailers have to provide added value in some other form. The issue here is that retailers will have to step up their game in one or more ways in order to keep shoppers checking out.
Here are a few ways to accomplish this:
1. More targeted advertising to acquire new customers that will buy items at full price
2. Better customer service
3. Personalized experiences and offers
4. Free shipping and BOPIS
5. Stronger brand value driven by high quality products
At this point the issue is consumers are addicted to discounting and they expect it. Retailers have created the expectation to compete on price and discounting is like a drug to push short term sales and traffic. The only way to transition is to make sure the discounting is manageable in terms of margin erosion. Last thing you want to do is to discount yourself out of business.
Personally, I don’t think retailers have a discount monkey on their backs—they’ve got it in their heads. And it comes from several sources:
1. They are not salesmen, but merchant warehousemen, to whom shopping is all about the price.
2. They believe that shoppers are as obsessed about prices as they are.
3. There is a small percentage of shoppers who, as the old saying goes, “Know the price of everything, and the value of nothing.” For these, it IS all about price, and you should hope and pray that these shoppers move to your competitors. STOP allowing them to confirm your own misguided thinking.
I provided 3 links to further evidence yesterday: Glen Terbeek,s Agentry Agenda; The Harvard Business Review’s “Mind Your Pricing Cues,” and my own parsing of the three components of price, “Evolving Brands and Retailers.”
None of this is intended to say a fair price IMAGE is not essential, nor that, as Sam Walton did in the early days of Walmart, retailers ought not scour the land for great deals at wholesale, to keep their prices down. But as long as their major source of profits is their brand suppliers, the idea that they are running their stores for the benefit of their shoppers, is a fiction, making them vulnerable to someone who really is putting the shopper first. This is the REAL vulnerability of bricks-and-mortar retailing to Amazon, not something about the mechanics of display and delivery, offline vs. online.