Consumers Warm Up to the Idea of Varied Pricing Per Channel
Want to pick up a new Kindle Fire this weekend? You can get one from Staples for the same price as Amazon, but you’ll get a $20 Staples gift card as a bonus. Only thing is, you can only get the deal if you go to the store because they’re not available through Staples.com.
That’s a better scenario than when you research an item online then go to buy it at the store only to find the price is higher. The logic is that it costs more to run a store, so they have to charge more. Even if it’s true, is that good business?
A recent study by RetailWire shows that almost half of consumers surveyed said it was fine for retailers to price things differently online and off. Which means almost an equal number said prices should be the same across all channels.
Those people will probably be even more upset when they hear about personalized pricing, as in, changing prices based on a particular customer’s shopping habits.
My grocery store does this and I love it. Every so often, I get a pack of discounts and freebie grocery coupons that have obviously been printed to align with my normal shopping habits. So while the guy next to me is paying full price for his bag of Peet’s Coffee, I’m getting mine for free. Doesn’t sound fair, but it’s really just a variation on a loyalty program. I get rewarded for sticking with a brand and the store gets my business for at least one more week.
Safeway has taken this model a step further by customizing the prices on items based on a customer’s shopping history. If buying patterns suggest a big family, the store will offer a lower price on a super-size box of detergent. No coupon needed, just hand over the loyalty card and get your savings while the person after you pays full price.
A survey from 2005 shows that most consumers think it’s illegal for stores to offer different prices to different customers but how many of those people would turn down a discount that was offered to them? Probably the same number of people who turn down free breadsticks at Olive Garden.
And even though personalized pricing means giving up your purchase privacy, many people are okay with it if it means lowering their grocery bill.
Going back to online and offline, preferred pricing is an excellent way to drive traffic in either direction. Now we have to include mobile in that equation, too. Offering a discount price when a consumer comes in through a mobile device might increase the number of impulse buys. It’s like the ticking clock on QVS – get it now or risk paying more if you decide to buy tomorrow.
According to eMarketer, price is the number one concern when it comes to deciding where to shop, but ease of use, urgency of need and customer service all factor in to the decision. So a $10 discount for buying online, might not be enough to keep customers from paying more at a store where they can touch it, try it and return it easily if it doesn’t work out.
What do you think? Should retailers charge the same price on the same item regardless of the customer or channel? Or is it a case of you gotta do what you gotta do in order to get the sale?