The thrill of the hunt for discount prices
The Internet can tell us how long it takes to walk the length of the Great Wall of China (10 months), how many girlfriends George Clooney has had (lots) and even how many snowflakes fall in a year (about a septillion). But consumers still can’t quickly and easily compare prices for a leather purse (big enough to tote a laptop, please) or a 10-quart aluminum stockpot.
Sure, thanks to aggregator sites like Orbitz and Cheaptickets.com, comparisons of airline tickets are easy to come by. And there’s transparency of pricing on wholesale commodities like butter, eggs and sugar. But that leaves a vast middle ground untouched. There is no Kayak9.com for teapots or women’s sweaters.
Perhaps that is because nobody — neither consumer nor retailer — wants it.
“We think we want all access, to know everything about everything in the consumer space,” said Kelly Goldsmith, an assistant professor of marketing at the Kellogg School of Management at Northwestern University. “In reality, when we know everything about everything, it is exhausting,” she said.
Especially if consumers investigate options on their own — from new to used, vendors local to national, warranty or no. Too much information, Goldsmith said, can decrease the odds of a consumer buying anything.
There is a psychological aspect to this, too. Finding deals can make people feel good. For some shoppers, it’s about the thrill of the hunt.
“When there’s something I’ve been eyeing and I see it go on sale, it’s like God just sort of put it there for me,” said Elise Ariel, a 37-year-old legal assistant, as she shopped recently at Century 21 in Manhattan. “How do I feel about sales? Like a moth to a flame.”
And while she admitted that shopping through a price aggregator site for a new pair of pumps, as she might for airline tickets, would be better from a practical standpoint, it would mean an end to her love affair with retail. “You come across something with a little red price tag on it in a bin of God knows what. You feel like it’s destiny.”
Then there is the retailer’s perspective. Consider what happened when Ron Johnson, former chief executive of J.C. Penney, committed to transparency and predictability and decided the chain would stop running sales. Shoppers waiting for the dopamine hit that comes with the unexpected opportunity for a bargain were disappointed, and customers fled in droves.
Advertising discounts, deals and perceived steals are often how retailers get shoppers in the door in the first place, said Barbara Kahn, a professor of marketing at the Wharton School at the University of Pennsylvania. “If the sale wasn’t there, well, maybe they wouldn’t go to the store that day,” she said.
For discount chains, slashing prices is crucial and nearly constant. But for midrange retailers, the Lord & Taylors and Banana Republics of the shopping world, sales are meant to be special. Competing solely on price can lead to a downward spiral of ever-deeper discounts.
“I don’t think they want to get into this game that you can’t win,” Kahn said. “They’d rather compete on providing value to the customer.”
Even if retailers agreed that transparent pricing should be more widely available, comparing prices for multitudes of products would take a special kind of brain — one that loves spreadsheets or navigating phone trees run by the Internal Revenue Service.
“There are a limited number of products where consumers have boiled down their understanding to such a limited set of factors that they can be confident truly shopping on price,” said Robert Haslehurst, the managing director of retail practice for L.E.K. consulting, a global management consulting firm.
Take the humble T-shirt and its endless varieties. “The T-shirt from Walmart and the T-shirt from the Gap aren’t the same T-shirt, and you need to be superexpert at the construction of T-shirts, and the shipping of T-shirts and the marketing of T-shirts in order to determine if one retailer was making extra margin off of you,” said Joshua Pollack, an associate partner with the Parker Avery Group, a retail price consulting firm.
Even if you do manage to sharpen your focus — to, say, a black, short-sleeve V-neck in a polyester blend — you will wonder why it costs what it does.
Raw materials are also only one part of the equation, Haslehurst said. “There was the artist who designed it. There was the retailer you bought it from and the person who put it in front of you,” he said. “There’s value in more than just the item. There’s value in the distribution.”
And then there is the variable that retailers rely on, that different shoppers are willing to pay different prices for the same product. Take the ever-changing price of a plane ticket. “One would think that I would pay the exact same price wherever I go,” Pollack said. “But because of this price discrimination capability you actually may not.” When the airline industry first began setting prices based on when customers bought tickets or how many seats were still left, customers were furious, Pollack said. And they still are. “But despite the fact that customers hate the practice, it was so profitable for the travel industry, they just had to bear it out,” he said.
It is unlikely, Pollack said, that consumers will see complete transparency of prices, mostly because comparing products is not always as easy as Apple iPhone to Apple iPhone.
Tell that to Vivian Harrow, 46, a human resources director for a global beauty company, and odds are she won’t mind. Harrow said she enjoyed browsing and scanning, but not online and not with an app. “It’s no fun to go out, and go into a store, buy something at retail, or buy something where you know every place you go it’s going to be priced exactly the same,” she said. “There’s no challenge in that. It’s just not as much fun.”
This story is part of a collaboration between Marketplace and The New York Times called “A Guide to Buying Just About Anything.”
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