The lure of a low price is a powerful thing. It catches the eye; it makes a consumer think twice and stop to investigate further. Sometimes it can prove too irresistible to ignore, resulting in a triumphant walk to the till. Just offering low prices, without due consideration for quality, however, is rarely a sure-fire path to success. A proposition is inherently rated on its ability to offer value for money, a highly personal and subjective perception that must chime with a target consumer’s personal circumstance and preferences.
Whilst price is intrinsically quantifiable, quality (in its broadest sense) is an interpretation of a wide range of attributes, such as functionality, durability, fit, etc. Continual re-evaluation of the value proposition is necessary to ensure price levels and quality attributes do not deviate from what consumers consider acceptable.
So, who’s executing both sides of the value and price equation well? Health and beauty value specialist Savers saw a 6.9% increase in like-for-likes in 2016, with a stated aim to offer quality brand name products at competitive price points (the impact of recent cost pressures will be interesting to observe). The Works is opening stores at a rate of 50 a year, with an emphasis on competitive pricing to ensure ‘amazing value’ across its multi-category offer. And Flying Tiger lets its own-designed products do the talking by using minimal packaging and a range targeted at a broad customer base.
We often make use of customer research in our projects, in combination with other metrics and our experience, to delve deeper into the mindset of consumers in order to unpick value for money perceptions. Tracking key measures through research undertaken at regular intervals allows trends to be identified, with management teams then able to respond quickly to changes in customer sentiment.
Retailers at the value end of the spectrum are not immune from the need to consider how the complete shopping experience contributes to such perceptions, including the role of customer service, visual merchandising, space and range planning, packaging, branding, etc. Marginal gains across these and other factors lead to competitive advantage – together with low prices, this is a winning combination.