Price, Convenience Or Service? Which One Is Most Important To Holiday Shoppers?

According to the National Retail Federation (NRF), 141 million unique shoppers went shopping during Thanksgiving weekend this year, a slight increase over 2012. However, average spending decreased by 3.9% from last year, which NRF attributes to lower prices. Starting well before Thanksgiving and continuing through this weekend, retailers have been encouraging us to join the fun by bombarding us with ads and emails. Most of the ads focus on prices, which might lead you to think that competitive retail pricing strategy of low prices is the most important factor in winning customers. For a certain segment of shoppers, that is certainly true, but for a very large segment of the population the shopping experience matters much more than prices.

First, here are some of the reasons Thanksgiving weekend is the biggest shopping weekend of the year in the U.S:

1) The Friday after Thanksgiving is a holiday for many people.

2) Many families do not want to jump the gun on holiday shopping before dealing with the preparation and celebration of Thanksgiving.

3) There is only a month or so remaining until Christmas and less until Hanukkah (although this year Hanukkah fell simultaneously with Thanksgiving).

4) Retailers offer sale prices.

I conducted a small, informal survey among friends, extended family members, and friends of my college-age children to find out who would be shopping on Black Friday and why or why not:

My daughter and one of her friends went shopping, but were unwilling to get up early to do so. Their reason for shopping was simple – “Everything is on sale.” Apart from the college girls, the most common answer to my questions was: “I’m not going anywhere near a mall.” A couple of the respondents had to work Friday, but the bigger issue was the crowds. “It’s so hard to find a parking spot, and there are not enough store employees to help you.”

When everything else is equal, we all would prefer a lower price versus a higher price, but everything else is not always equal. For example, if an item you want to buy costs $95 at Walmart, 20 minutes away from you -- or $99 in a store five minutes from you, which would you choose?

a) Shoppers on tight budgets would probably choose Walmart or Target if they could buy several other things on their list with similar price differences at the same time.

b) Many other shoppers would prefer to save the time and energy and avoid the crowds by purchasing the item locally.

As another example, consider a couple whose shopping list includes ten gifts for their kids, mostly electronics and clothes. They have looked at the ads and no single store has everything on their list, and to get the lowest price on all items, they would have to visit 5 stores.

What is the likelihood they will drive to all 5 stores, scout around for parking, hunt for the specific items, and wait to pay in 5 different lines? Even those couples on a budget will make tradeoffs. They will pay a little extra to avoid the hassle of going to all those stores.

And since they are doing so much shopping, to pick among the 5 stores they will also weigh the tradeoffs of convenient parking, wide aisles, ease of finding the products they are looking for, helpful sales people, and enjoyment of the shopping experience versus the amount of money they have to spend.

Let’s look at one last example: A husband buying either jewelry or clothing for his wife. Perhaps I am being unfair to men here, but I think in this case the shopper will go where he can get help. It is not worth the risk of selecting a gift his wife does not like in order to save a few dollars. A store with a reputation for helpful sales people will have an advantage over a store with slightly lower prices.

There are limits to all of these situations: If the price difference is large enough, shoppers will make the tradeoff to drive further, put up with crowds, etc.

Bottom Line For Your Bottom Line

As long as competitor price comparisons are not too large, most shoppers will select where they shop based on the overall experience, not just on price. If you want to win more business, focus on making it a good overall shopping experience and communicate what is unique about shopping in your store.   


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Scott Francis, Guest Contributor

About Author

Scott Francis is the President of Strategic Pricing Solutions, a management-consulting firm helping clients with pricing strategies, data analytics, and pricing processes. Scott has more than 25 years of pricing experience both as a consultant and in roles leading the pricing function at large corporations. Scott's thinking is heavily influenced by the data-driven approach he learned studying finance and behavioral economics while earning an MBA at the University of Chicago. Prior to forming Strategic Pricing Solutions in 2005, Scott held a variety of corporate positions including CFO, SVP of Marketing and VP of Pricing. Follow Scott on Twitter@StratPricing and at
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