Through a special arrangement, what follows is an excerpt of an article from Retail Dive, an e-newsletter and website providing a 60-second bird’s eye view of the latest retail news and trends.
For many purchases, it’s hard to know what the fair price is. That’s in part because of the constant barrage of sales, but also because many retailers aren’t really ever charging the “original” price. The listing of discounts over essentially fake original prices is known as “price anchoring,” used by many retailers to varying degrees.
But regulators and courts don’t like it when retailers take the practice too far because they consider it deceptive. J.C. Penney, where former CEO Ron Johnson was highly criticized for replacing price anchoring with “always low prices,” is being accused in a class-action lawsuit of misleading shoppers with most, if not all, of its price tags.
And what exactly is “price transparency”? Seriously.
If I buy it for $50 and sell for $200 because my rent is on 5th Avenue in NYC and I can get it — is transparency supposed to reveal what it cost me to make that item available on 5th Avenue?
In retail, there’s always someone cheaper.
Customers know the game and are willing to play it. Outlet malls may make customers feel they are getting a bargain price so they can justify it to their friends — but knowing they are getting a bargain? I don’t know who or how one could legitimize that feeling.
As to Ron Johnson, just to reiterate: Worst. Makeover. Ever.
The barrage of promotional events, often with weeklong sales overlapped by one-day sales and so forth, has created the impression that “everything is always for sale” in many promotional department stores, and it’s a powerful marketing tool. But I’m guessing that a study of the actual number of days items are on or off sale might paint a different picture.
Most of the stores mentioned in the story have to deal with the reality of various states’ regulations, especially when they operate coast-to-coast. So there is probably a science applied to the establishment of regular prices, followed by a strict calendar of “on sale” and “off sale” days.
As a hypothetical, just because Macy’s puts a private-label polo shirt into every one of its “one-day sales” doesn’t mean that the goods are on sale 365 days a year. And just because they do sell goods at “regular price” some of the time doesn’t mean they can compel customers to pay full price for them.
In a word, this practice is increasingly “archaic.”
The reality is that that “there’s an app for that.” Consumers are increasingly checking prices on their smartphones. And there are a host of new apps that will track actual street prices on almost any type of product.
Today we literally have price transparency daily if we want it. It does not matter what the retailer posts as “everyday” or MSRP pricing. The consumer will vote on how much they are willing to pay based upon their experience, service levels and the convenience of having the merchandise right now.
Oh by the way, if you have checked the financials of Sears lately, you have to wonder how long they will survive based upon their pricing strategy.