NEW YORK- WWD CEO SUMMIT - Senior retail executives are being too quick to dismiss the impact pricing has on consumer purchase decisions, according to a new report by First Insight, Inc., a global technology company transforming how leading retailers make product investment and pricing decisions. The company, which recently surveyed consumers and senior retail executives on consumer shopping habits, purchase behavior and influences driving decisions, found that while both groups named 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 study points to a significant perception gap between senior retail executives and consumers on the current pricing landscape. Only 20 percent of senior retail executives felt that consumers believed prices were increasing online compared to more than half (51 percent) of consumers who reported feeling they were. 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.
“While everyone agrees that quality of products is the most important factor in purchase decisions right now, these data show consumers are more concerned with pricing than many senior decision makers in the retail industry suspect,” said Greg Petro, CEO and founder of First Insight. “The impact of this disconnect will only continue to grow as prices rise due to tariffs. 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.”
Results of the survey also indicated that while the majority of senior retail executives felt mobile was the technology having the greatest impact on their business (80 percent), almost no senior retail executives acknowledged the impact of smart speakers. Meanwhile, the number of consumers who said they own smart speakers was up 75 percent to 42 percent of respondents when compared to a similar survey last December. The majority of consumers who own smart speakers are using them to research prices (59 percent), a significant increase from December (49 percent).
Results of the surveys were announced today during WWD’s CEO Summit in New York City.
Download the report and accompanying infographic to see all of the key findings from the study here.
Other significant findings of the surveys include:
Senior Retail Executives are Underestimating Importance of In-Store Discounts and Better Pricing to Consumers
Although 36 percent of consumers ranked price promotions, coupon availability or better pricing as one of the top three factors making them want to shop in physical stores versus buying products online, the survey found that only 12 percent of retail executives ranked these factors as important to consumers. Both consumers and senior retail executives agreed that being able to see, touch and feel the product ranked the most important (36 percent by consumers, and 44 percent by executives). Being able to take a product home immediately was named as a top-three factor by 41 percent by consumers, and by 59 percent of executives.
Consumers are Shopping On Mobile Devices Less Often than Executives Think, but Consumers are Increasing Shopping On Mobile Devices Overall
Seventy-eight percent of senior executives believe that consumers are shopping on mobile devices occasionally to very frequently (6 or more times a month), but only 47 percent of consumers reported shopping that often. That said, the number of consumers who are making one or more purchases online per month is increasing. When comparing to last December, the number of consumers who responded that they never shop using mobile devices dropped from 34 percent to 19 percent, a relative decrease of 44 percent.
Voice of the Customer Analytics and Predictive Analytics Selected as Most Transformative Technologies by Executives Who Plan to Invest in These Technologies in the Next Year
Fifty-nine percent of senior retail executives name voice of the customer analytics among the most transformative, with another 49 percent naming predictive analytics. Forty-six percent and 63 percent of senior executives plan to invest in Voice of Customer analytics and predictive analytics, respectively, in the next 12 months.
Worth noting, expedited delivery was the third most popular answer, with 41 percent saying it was transformative to their business.
Consumers Still Shopping More In-Store
Seventy percent of senior retail executives believe consumers make more purchases in-store than online. In reality, consumers surveyed make about 60 percent of purchases in-store, versus 40 percent online.
Notes on Survey Methodology and Analysis
First Insight’s findings are based on three separate surveys. The consumer surveys are based on targeted samples of 1,000 respondents each and were fielded in December of 2017 and September of 2018. They were completed through proprietary sample sources amongst panels who participate in online surveys. The third was based on a sample of 41 retail senior-level business executives (C-suite, EVP/SVP and Vice President roles), and was conducted in October 2018.
About First Insight, Inc.
First Insight is the world’s leading customer-centric merchandising platform that empowers retailers and brands to incorporate the Voice of the Customer into the design, pricing, planning, and marketing of new products. Through the use of online consumer engagement, the First Insight solution gathers real-time consumer data and applies predictive analytic models to create actionable insights, which drive measurable value. Retailers, manufacturers and brands use the First Insight solution to design, select, price, plan and market the most profitable new products for reduced markdown rates and improved sales, margins and inventory turnover. Customers include some of world’s leading vertically integrated brands, sporting goods companies, department stores, mass merchant retailers and wholesalers. For further information, please visit www.firstinsight.com.
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