What we know: consumers are hardly ever willing to pay full-price for product. What we don’t know: how to get retail out of this vicious cycle.
Put simply, because discounts are everywhere all the time—especially at department stores and mass merchants—consumers have come to expect it. And without the discounts, many of these shoppers will take their wallets and go home. Hence retail’s present problem.
Though experts haven’t yet figured a way out of the discount conundrum, it’s at least beneficial for retailers how bad it is and who’s more or less likely to spend, in order to start solving the puzzle.
“The results of this survey indicate that the rampant discounting that has become the norm in department stores and mass merchants has had a clear impact on consumers and the way they now consider purchases in every aspect of their lives,” said Greg Petro, CEO and founder of First Insight, a predictive analytics technology company.
Consumers expect discounts every time they shop
A considerable 90 percent of the 750 U.S. consumers surveyed for First Insight’s study admitted the unchecked discounting in retail today significantly or somewhat influences their expectations for discounts. Though apparel isn’t specifically outlined, the behavior patterns when it comes to how consumers shop appear to be translating across categories. Another 90 percent of consumers expect discounts on home electronics, 88 percent for home appliances, 83 percent for smartphones and 80 percent for cars.
“In categories ranging from home electronics to automobiles, a vast majority of Baby Boomers and Gen-Xers are less likely to consider purchasing at full price, with Millennials less impacted by discounts overall,” Petro said. “This is an incredibly useful finding, and retailers need to be aware of these shifting expectations within their target audiences in order to compete, while still maximizing profits and sales. It’s a delicate balance.”
Baby Boomers are the least likely to pay full price
Baby Boomers, it seems, are more sensitive when it comes to how much they’ll spend for something. Seventy percent of Baby Boomers surveyed said they would definitely not or probably not buy goods at full price. Millennials, on the other hand, are more likely to buy what they want, with discounting having less of an effect on that decision. Thirty-nine percent of Millennials said they wouldn’t pay full price for a car, 41 percent for home electronics and 42 percent for home appliances.
Gender isn’t a factor
Though it’s often rare in other aspects of life, men and women are generally on the same page when it comes to how much discounting affects their buying decisions. Eighty-three percent of both men and women won’t pay full price for a smartphone, for one, and across all categories, the genders weren’t more than three percentage points apart.
Where consumers expect the deepest discounts
Consumers want their biggest discounts in the electronics and appliances category, though they are willing to spend a little more for smartphones and cars.
But apparel shouldn’t count its blessings yet. A Euromonitor post from December said ever since apparel retailers started the discounting as a short-term fix in a tough economy, customers have come to see it—and love it—as a long-term habit.
“The arrival of online and mobile shopping means cheap fashion items shipped from China are now just a click away, while fast fashion stores have created a competitive environment where the focus is on bargain prices 365 days of the year,” Euromonitor wrote in a report. “Why would consumers expect to pay full price when the high street is saturated with cheap fast fashion and sales are a regular fixture of the retail environment?”