RSR Research: Does Channel Pricing Conflict Break Trust With Shoppers?
Through a special arrangement, what follows is a summary of an article from Retail Paradox, RSR Research’s weekly analysis on emerging issues facing retailers.
You’re standing at a store shelf. You want to buy an item, but you’re just not sure. You think, "I’d better check online," and pull out your phone. You price check. The top result — this retailer’s online version of the item right in front of you is 20 percent less than the store price.
What’s the reaction? "Hey! I thought you were looking out for me, Retailer. I was about to buy this item, but now I feel like an idiot. I would have ignorantly paid 20 percent more without a second thought, simply because I trusted that you weren’t trying to take advantage of me. But now, if I’m going to continue our shopping relationship, I clearly need to look out for myself a heck of a lot more."
Next time it won’t take you so long to reach for the phone and, the next time it happens again, the harder it will be for the retailer to rebuild your trust. And if shoppers learn not to trust a retailer’s prices, it’s not that long before they start thinking they’d better check around on assortment too. Their loyalty is now completely in play for any other competitor to grab.
I’m making a big deal about this because of RSR’s upcoming pricing research (available April 11). Last year retailers were in a panic over showrooming and price matching. Zone pricing was dead, killed by price transparency. This year, retailers are much more sanguine. They told us in our benchmark that as long as they had publicized policies that covered price matching — who, when, and how much — they felt they could price across channels and zones however they liked.
Back to the 20 percent online discount example above. Sure, I could go to the cashier with phone in hand and say, "Hey, this is 20 percent less online. Will you price match?" And sure, the cashier will likely say, "Oh yes!"
But is that really a positive outcome for the retailer? To me, it’s a scenario in which the customer leaves not delighted that she got the lower price, but frustrated that she had to fight for a lower price. The shopper had to make sure she got the best price, instead of being able to trust that the retailer is giving her a good deal.
- With Dynamic Pricing, Stores Lose – RSR Research
- Changing Direction – The Future Of Dynamic Repricing – Stores
Do you agree that pricing differently across channels may shake consumers’ trust in retailers? Do you think retailers should vary prices across channels and zones as long as price matching practices are publicized? Are there situations in which consumers will accept higher prices, for example, based on where a store is located?