What drove you to choose the stores you did for holiday shopping? Did sales or promotions influence your decision to shop at a particular store? Sales drive a lot of sales, but some analysts are predicting sales may become a thing of the past.
The website, Coupons in the News, had access to an industry report from retail consultant AMG Strategic Advisors on this issue. Coupons in the News reports that AMG predicts that within three years everyday low pricing will replace sales and promotions.
According to the report, 65% of shoppers said they “expect certain products to be on sale and, if they are not, they will wait until they are on sale to purchase.” Some items are on sale at frequent intervals making it easy to stock up during the sales, and wait until the next one.
Coupons in the News points out the failure JCPenney experienced trying to wean consumers off these predictable sales, but points out the grocery business is different. Walmart already has an everyday low price model, and it’s been successful with it.
While Walmart is king, it’s worried like everyone else. The grocer is attacking regional grocery giants in retail markets across the country. Since when is Walmart concerned with Giant Eagle? Marketing experts say it shows every retailer is fighting to preserve the bottom line.
My previous reports for NewsChannel 5, have also shown a huge surge dollar stores. There are now more of these type stores than McDonald’s. Many are creating stand-alone stores rather than putting them in strip malls. The stand-alone stores offer more grocery items like frozen and perishable items. It makes you feel like you’re in a real grocer.
Even Walmart and Target are offering dollar bins in prominent parts of their store to compete with the dollar stores.
Save-A-Lot and Aldi have also been successful brands in this new type of environment. They’re not known for their sales, but their low prices.
Of course the economy has helped spur these stores along, but it also shows you can have low prices without sales.
Grocers already experimenting
Coupons in the News said nationally grocers are already testing these low price models including Ralphs, Food Lion, and Kroger.
Locally, Giant Eagle is experimenting with a similar policy. The grocery giant in our region froze prices through the holidays on more than 300 items. This week, the grocer extended the price lock through the winter. While some would argue Giant Eagle’s prices are not the lowest around, I think this is a strategic strategy and marketing technique to make you think it offers low prices. The technique makes you think you’re getting a bargain.
The retailer also is branching off with it’s sister grocer, ValuKing. The store’s motto is “to count on low prices every time you shop.” They don’t run sales, because their prices are low every day.
During a recent store visit for a NewsChannel 5 story, Valu King Senior Vice President John Tedesco said, “We don’t run weekly specials. And we don’t play the high-low game, so this is an everyday low price. This is our everyday price on bananas 28 cents a pound.”
The store keeps prices low by cutting one of its biggest costs — labor. You bag your own groceries and items are displayed on crates and boxes rather than store shelves.
Executives said that while they buy most items including organic, deli, and fine cheeses they won’t buy a few items like diapers because they can’t get bulk prices on them.
What is the future?
While eliminating sales may seem like a drastic move, Coupons in the News said AMG pointed out that 60% of brand-name products are sold at regular prices without sales. Many products don’t go on sale, so would consumers really miss them?
Coupons in the News didn’t seem as optimistic that sales will disappear in three years as predicted, and I agree that it won’t be mainstream in three years. Sales will always be important because they strongly influence consumer behavior. However, I think we’ll continue to see changes and a new environment will emerge that makes us less dependent on sales to save money.
It makes sense that a retailer like Giant Eagle has two different brands that employ the various marketing techniques. It’s a safe bet as I’m not sure one marketing strategy is proven to be lead to more or less success.
As more stores emerge that offer everyday low prices, consumers will change their behavior that makes them less reliant on sales.
The one thing that appears definitive — stores are experimenting and consumers need to be prepared. Look beyond the sales and look at the unit price so you know how much you’re really paying for the product you’re buying.
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