US shoppers go beyond price

NEW YORK: Consumers in the US emphasise a range of factors beyond price when determining the "value" offered by online and offline retailers, a study has found.

McKinsey, the consultancy, polled 6,000 adults in the country, alongside comparing the cost of over 1,100 products at 20 different chains.

"While price competition is tough, our consumer research and client experience show that perceptions of value still matter in the ever-more-complex multichannel-retailing environment," it said.

"Retailers can employ proven tactics to shape perceptions and take advantage of the fact that consumers care about more than just the price tag when they buy."

In all, 24% of interviewees cited expensiveness as influencing attitudes on whether retailers gave value for money, in terms either of being consistently cheap or presenting "exceptionally low prices from time to time."

Experience - defined as making it easy to locate desired items or straight-forward convenience - recorded 17% on this metric.

Trust generated the same figure, be it because of a customer's confidence in a company or a belief the lines on sale are "always good quality."

Elsewhere, the breadth and various price tiers related to product assortment received 12%, as did an organisation's returns policy.

The ability to simply find out information posted 11%, while delivery costs secured 4%, and loyalty programmes reached 3%.

"Even in the most competitive product categories, such as consumer electronics, retailers can look beyond price and actively shape perceptions of the value they offer," McKinsey said.

"None of this happens by chance; retailers can implement strategic moves to get credit for superior value."

In demonstration of this, the study revealed there was a clear "gap" between the prices companies demanded for women's apparel and customer observations.

For example, 75% of contributors agreed Kohl's boasted "better prices" in bricks-and-mortar outlets, while two-thirds supported this proposition concerning its ecommerce platform.

McKinsey's placement of Kohl's position in the market showed it actually scored 160 points on a real pricing index for its stores and nearly 180 points online, where 100 points constituted the cheapest vendor.

Almost 65% of customers praised the value of Target's physical stores, falling below 60% for Target.com, and measured against index ratings of 100 points for its offline network, and approximately 110 points on the web.

JCPenney was described as providing good prices by two-thirds of buyers in high-street sites, and dipped on the web, to slightly over 60%, matched by 140 and 150 index points in turn.

Overstock.com hit roughly 62% for the number of respondents stating it supplied "great prices" and an index total surpassing 180 points, standing at around 60%, and 230 points, for QVC.com.

Amazon.com lodged 240 points on the price barometer, but was seen as registering an excellent performance here by seven in ten participants.

"Amazon.com - which typically has among the lowest prices in categories such as consumer electronics - charges more for similar types of apparel than Kohl's and JCPenney do, yet retains a 'halo' of value among the consumers we surveyed," said McKinsey.

By contrast, department store specialist Macy's witnessed a high degree of correlation between perceptions of being a premium outlet and real prices.

Data sourced from McKinsey; additional content by Warc staff, 10 May 2011

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