Market Overview

Quality More Important to Consumers than Price as Influence of Discounts on Purchase Decisions Declines

Share:

Signals Shift in Consumer Mindset as Retailers Meet Consumers with
Differentiated, Innovative Products Priced Right

Quality is becoming more important than price to most consumers, as 53
percent rate quality as the most important factor when making purchases
compared to price (38 percent) according to a new report by First
Insight
, a technology company transforming how leading retailers
make product investment and pricing decisions. The report also notes
that consumer expectations for discounts are falling as an increasing
proportion of consumers surveyed said department store discounts had no
influence on expectations for discounts across other categories
including vehicles, smartphones, furniture, home appliances and home
electronics.

The survey queried 1000 participants in the U.S. on their shopping
habits, purchase behavior and influences driving decisions, and tracked
changes in consumer sentiment on the impact of widespread discounting by
department stores and mass merchants from March 2017 to December 2017.

"For years, consumers have been trained by department stores and mass
merchants to focus on finding deals, and many retailers have responded
with deep discounts," said Greg Petro, CEO and Founder of First Insight.
"The results of this study indicate that we may be reaching a tipping
point, as retailers who have been focused on providing consumers with
the quality, differentiated products they want and the price they expect
are gaining greater traction and changing the consumer mindset. As the
pendulum swings away from discounts, retailers have an opportunity to
capture greater sales through quality products in every category, from
apparel to furniture and appliances."

According to the results, furniture and vehicle categories reflected the
sharpest percentage change in expectations with the number of people
saying discounts had no impact on purchases rising 98 percent and 74
percent respectively. Home appliances (36 percent), home electronics (27
percent) and smartphones (26 percent) also saw significant increases in
people who said that discounts had no impact on their purchase decisions
in these categories.

Download the infographic that illustrates the key findings of the survey here.

Significant findings include:

Influence of Discounts on Purchase Decisions in Furniture Fall the
Most

The percentage of men and Baby Boomers who said discounts do not
influence their purchase decisions more than doubled (111 percent and
128 percent increases, respectively) in the furniture category, with the
percentage of Millennials nearly doubling (94 percent increase). The
percentage among women and Generation X respondents also increased
around 77 percent each.

Women and Millennials See Sharpest Fall in Influence of Discounts on
Purchase Decisions for Vehicle Discounts

The percentage of women and Millennials who said discounts do not impact
their purchase decisions on vehicles nearly doubled (97 and 93 percent
respectively) from March to December 2017. While the percentage of men
also increased by 52 percent, it was by a much slimmer margin, as were
Generation X (60 percent increase) and Baby Boomers (78 percent
increase).

Generation X and Women Still Influenced by Discounts on Smartphone
Purchase Decisions

While a growing percentage of men (61 percent more) and Baby Boomers (64
percent more) show lowering influence of discounts on smartphone
purchases, the impact of discounts on women's and younger generations'
purchases is about the same or increasing. Women saw a nine percent
decrease in the percentage of respondents who said department store
discounts have "no influence" on expectations for smartphone purchases,
with Generation X decreasing by five percent in December, compared to
March of last year.

Millennials Remain Steady on Influence of Discounts on Home Appliance
Purchase Decisions

While the percentage of respondents that said department store discounts
were having "no influence" on expectations for discounts in home
appliances increased overall, particularly with Baby Boomers (87 percent
increase), the percentage of Millennials increased by only three
percent. Male respondents increased nearly 50 percent, with women
respondents increasing 20 percent and Generation X increasing 30 percent.

Influence of Discounts on Purchase Decisions Dropped Drastically for
Men and Baby Boomers

The percentage of Baby Boomers reporting that discounts influenced their
home electronics purchases dropped nearly 60 percent, significantly
higher than Generation X (14 percent) and Millennials (18 percent). Men
are also less likely to be influenced by discounts in home electronics
than women, with a 34 percent increase in respondents in December
compared to March saying department store discounts had "no influence"
on expectations in this category, compared to an only 18 percent
increase in women.

Quality More Important than Price Across Generation, Gender and
Income Level

Fifty-four percent of men and 51 percent of women ranked quality as the
most important factor when making a purchase. Similarly, more than half
of Baby Boomers, Millennials and Generation Xers choose quality over
price, with Xers the most influenced by price (41 percent) versus
Millennials and Baby Boomers, with 36 percent of both groups saying
price was the most important factor. Similarly, while 62 percent of
affluent respondents (who make more than $100,000 per year) ranked
quality as the most important, compared to 49 percent of those that made
less, it was still significantly more important than price with both
groups. Twenty-eight percent of affluent respondents ranked price as
most important, versus 43 percent of those who made less.

About First Insight, Inc.

First Insight is the world's leading provider of solutions that empower
retailers and brands to incorporate the voice of the consumer into the
design and merchandising of new products. Through the use of online
consumer engagement, the First Insight solution gathers real-time
consumer data and applies predictive analytic models to create
actionable insights, which drive measurable value. Retailers,
manufacturers and brands use the First Insight solution to design,
select, price and market the most profitable new products for reduced
markdown rates and improved sales, margins and inventory turnover.
Customers include some of the world's leading vertically integrated
brands, sporting goods companies, department stores, mass merchant
retailers and wholesalers. For further information, please visit www.firstinsight.com.

View Comments and Join the Discussion!