(WINDSOR, ON) – An internet phenomenon continues to reduce sales at big box stores, particularly those selling electronics. So much so that Best Buy, one of the largest brick and motor chains, reported a disappointing drop in sales over the past holiday season. This caused its shares to lose 28% of their value.
Too often savvy shoppers are using its stores to try out products they will then buy on the web, often for a cheaper price. However, relief might be on the way with what could be described as technically-assisted price haggling, which itself, could disappear quite quickly showing just how fast changes in marketing now occur.
Price haggling was a staple of a trip to local markets back in the 19th century until Timothy Eaton, owner of what became a Canadian retail giant, introduced fixed prices. It was apparently an instant winner because customers were not all that fond of arguing and haggling.
What is happening now could be driving marketing’s price experts to distraction. Best Buy valiantly tried discount pricing but still saw its sales sag even though it offers instant gratification. If customers find products they like they can buy them immediately, no waiting, no shipping and no shipping fees. What is holding them back is the often higher prices of the big boxes.
However, haggling at the store level could change that. Buyers have access to more information than ever before. If they find a product they like on a store shelf they can use their smart phones to price check, doing it right in store’s aisles. Armed with a competitor’s lower price they can simply ask for a discount.
According to the New York Times, December 16, buyers “have become bolder, and they know that they often have the upper hand during a tough season for retailers. Recognizing the new reality, some retailers, desperate for sales and customer loyalty, have begun training their employees in the art of bargaining with customers.”
For the retailers it is simply a choice of meeting a competitor’s price or losing the sale. There are also apps which help consumers negotiate and which might suggest that a stated price in a store is merely a suggestion.
In fact, potential buyers don’t even need to visit a store. Members of such websites as Greentoe.com post their product interest and the price they’d like to pay. Interested retailers can contact them to negotiate. This is happening mostly, according to the Times, among, “home and sporting goods or electronics, but even higher-end retailers like Nordstrom have price-matching guidelines — though they usually do not broadcast the terms.”
While all this new haggling could threaten to take retailing back to the pre-Timothy Eaton fixed price days, the haggling may be short-lived. In fact posted prices might soon disappear replaced by dynamic pricing. Visitors to some US retailers may have noticed small electronic screens where price stickers used to be. With these screens retailers can continually change prices to match their competitors.
Customers can use their smartphones for verification.
This could end in-store price haggling because one store’s price could be the same as all competitors. Retailers will resemble stock markets with their prices moving along in unison with their competitors.
Marketers will work behind the scenes ensuring profits can be made at these changing market prices or dreaming up value-adds to make even higher prices palatable.
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