Pricing more frightful for shoppers

Articles
October 10, 2012

Pricing more frightful for shoppers

Shoppers pressed by expenses will resent brands and stores that make it tougher to discern real value at the shelf.

Halloween is coming soon, so it’s okay if we use the term “scary” to describe how consumers feel about retail pricing today. And if we toss a “boo” at brands and stores that add to shopper anxiety with pricing tactics that make it harder for people to discern real value.

Not only are food prices heading up (along with gas, rent and everything else). But the middle class has lost significant ground this past decade. Between 2001 and 2010, the Pew Research Center found median household income has declined to $69,487 from $72,956, and household net worth shrank to $93,150 from $129,582. By the end of the period, the middle class controlled 45% of household income, down from 62% at the start.

Pew data show 51% of U.S. adults were in the middle class in 2011 vs. 61% in 1971—and most feel it is tougher to make ends meet now than a decade ago.

So don’t be surprised when they balk at buying items priced to confuse. The Lempert Report believes that when paper towel and toilet tissue brands change the size of rolls and the number of rolls per pack, or when center-store food brands in many categories reduce content by fractional ounces, it erodes trust in the brands and stores that allow it. This is especially true when shelf sticker prices per count or per ounce aren’t updated to reflect promotions. Families trying to make their limited budgets work don’t need brain twisters at the shelf.

For example, the front page of the current Target circular promotes a variety of mini-chocolate candy bars for Halloween. It’s a jumbo bag for $13.99, and its large print emphasizes 260 pieces. In much smaller type is the volume content—4 lbs. 9.70 oz., or 73.70 oz. We doubt Einstein figured out that cost per pound in his head.  

The latest run-up of Walmart stock has come since it reaffirmed its low price position. And dollar stores with more food, drug stores with abundant promotions, and extreme value chains such as Aldi and Save-A-Lot have grown lately because of clear, easy-to-understand price premises. At the upper end, Whole Foods and The Fresh Market are among chains growing among better-resourced shoppers.

This leaves the great middle of conventional supermarkets to suffer and lose trips today—in parallel with a struggling middle class. The Lempert Report thinks mainstream grocers and mass retailers irritate shoppers with pricing tactics that make value in the entire store suspect, and put store visits at risk.