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Price trumps sales and special deals, customer service, and convenience as a factor in deciding where to shop for the majority of US consumers, according to The NPD Group. NPD’s The Economy Tracker, a monthly monitor of consumer sentiment about the economy and spending, finds that in the most recent survey (March 2012) 85% of US consumers say that price will be an extremely important/important factor in deciding where to shop in the near future, 10% more than those who feel sales and special deals are extremely important/important.
By income, 87% of those in the household income bracket of $25–50,000 selecting price as extremely important/important, 85% in the $50,000–100,000 income bracket, and 82% in the $100,000+ bracket, according the The Economy Tracker. Seventy-nine percent of young adults ages 18–34, 86% of those ages 35–44, 88% of those 45–54 years old, 89% of those 55–64 years old and 86% of those 65 and older said price was extremely important/important.
“Shoppers are now savvier when spending money. They have new ways of gauging the marketplace—they can compare prices on the Web while at home or while standing in a brick-and-mortar store with their smartphones,” says John Deputato, senior vice president, advanced analytics at NPD. “We certainly have moved to a time of calculated consumption for shoppers… and price has come to the forefront of the purchase decision.”
Deputato points out that the sophistication of consumers when it comes to price, changes to shopping habits, and the soft U.S. economy has made the decision to set retail prices not only more difficult but more strategically critical for both retailers and manufacturers.
“Manufacturers and retailers recognize that setting the right pricing strategy is a competitive advantage in the marketplace, but pricing is more difficult today than it was prior to the recession,” says Deputato. “We’ve been working with the top retailers and manufacturers conducting price elasticity research to understand the wide range of potential impact on profits depending on the possible pricing decisions. Prices can’t arbitrarily be set, it takes information and a thorough thought process to come up with the right price.”