- Retailers have invested a great deal of money in cutting prices throughout their stores, but many times customers don’t notice or misperceive these price drops, according to three partners with consulting firm Bain & Company writing in Supermarket News Viewpoints.
- In a survey asking consumers to evaluate prices at eight different chains, respondents tended to either overrate or underrate retailers on their actual pricing, indicating that stores are either winning or losing the price perception battle.
- To give consumers a positive price image of their stores, the authors say retailers should focus on in-store signage, price-comparison promotions, private label products and out-of-store advertising.
In an increasingly competitive industry under pressure from price deflation, price promotions have become a crucial tool for retailers. The fact that many aren’t getting credit for these efforts should come as a warning flag for supermarkets.
As the authors from Bain & Company note, shoppers prize “best value” and “lowest prices” as the first and third most important reasons for shopping a store. To deliver on these key values, though, retailers must do more than just offer value and low prices — they need to show consumers how they’re doing so.
Clever signage is one way they recommend showing off price advantages. This could include a large sign positioned over a department, or a small, colorful shelf tag displaying the price off on a certain item. Emphasizing private label products is another avenue the authors recommend, as their increasing sophistication and price advantages offer an inherent value that shoppers can easily comprehend.
Retailers know these techniques well, but there are ways of honing them that could have a measurable impact. Supermarkets should target high-impact products with signage to maximize its effect. The value image of private label products, meanwhile, could be enhanced through in-store sampling, and through marketing that plays up a premium experience.
Store loyalty cards are a popular way to save money, but retailers aren’t always showing consumers where and how much they’re saving. Showing price savings on shelves, in receipts and elsewhere is another crucial way to build a positive price perception with consumers.