Consumers No Longer Willing to Pay Full Price as Deep Discounts From Department Stores Influence Consumer Behavior

— Says New First Insight Study —

Baby Boomers Expect Deeper Discounts Than Millennials and Gen-Xers

LAS VEGAS–(BUSINESS WIRE)–Shoptalk – Seventy-six percent of Baby Boomers will not pay full
price when shopping for home electronics, home appliances, furniture,
smartphones and vehicles, according to the first in a series of reports
by First Insight, a technology company transforming how leading
retailers make product investment and pricing decisions. The survey
found that widespread discounting by department stores and mass
merchants was significantly influencing the expectations of discounts
when consumers shop in other product categories. Expectations were
similar across genders but varied significantly by age, with Baby
Boomers expecting deeper discounts than Millennials and Gen-Xers.

Results of the survey, which queried 750 participants in the United
States on their shopping habits, purchase behavior, discount
expectations, and influences driving purchase decisions, were announced
today during Shoptalk in Las Vegas.

“The results of this survey indicate that the rampant discounting that
has become the norm in department stores and mass merchants has had a
clear impact on consumers and the way they now consider purchases in
every aspect of their lives,” said Greg Petro, CEO and Founder of First
Insight. “In categories ranging from home electronics to automobiles, a
vast majority of Baby Boomers and Gen-Xers are less likely to consider
purchasing at full price, with Millennials less impacted by discounts
overall. This is an incredibly useful finding, and retailers need to be
aware of these shifting expectations within their target audiences in
order to compete, while still maximizing profits and sales. It’s a
delicate balance.”

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

Significant findings of the survey include:

Today’s Consumers Expect Discounts Every Time They Shop

Ninety percent of all consumers surveyed acknowledged that discounts in
department stores and mass merchants significantly influenced, or
somewhat influenced, their expectations for discounts in home
electronics. Similar expectations were shared by consumers shopping for
home appliances (88%), furniture (86%), smartphones (83%) and vehicles
(80%).

Baby Boomers Are Least Likely to Pay Full Price; Discounts Have Less
Impact on Millennials

According to the findings, the vast majority of Baby Boomers surveyed
expect some level of discount in order to consider a purchase. Across
every category including vehicles, smartphones, furniture, and home
appliances, more than 70 percent of Baby Boomers said they would
‘definitely not’ or ‘probably not’ purchase an item in these categories
at full price, with an even higher 79 percent stating a discount would
likely be necessary when purchasing home electronics.

Millennials, however, indicated that discounting may have a reduced
effect on purchase decisions. Significantly less than half of
Millennials stated they would ‘definitely not’ or ‘probably not’ buy
vehicles (39%), furniture (40%), home appliances (42%) and home
electronics (41%) at full price. Only 35 percent would be less likely to
buy a smartphone at full price. Millennials continue to be avid
shoppers, however, with 66 percent of Millennials surveyed planning on
buying a smartphone and 65 percent planning on buying home electronics
in the next twelve months.

Gender Doesn’t Impact Expectations for Discounts

Somewhat surprisingly, across every category, men and women largely
shared the same or similar response in terms of how discounts from
department stores and mass merchants are impacting expectations for
discounts in other categories. For example, eighty-nine percent of women
stated discounts have had an impact on their purchase decision in
furniture, versus eighty-four percent of men — the widest gap. Women
showed only a slightly higher impact (one to three percentage points) in
all other categories but smartphones, where 83 percent of both men and
women felt there was an impact.

Deepest Discounts Expected in Electronics, Home Appliances and
Furniture

Roughly 80 percent of all respondents reported they would ‘definitely’
or ‘probably’ buy a product that met their needs at the deepest
discounts suggested by the study in categories of home electronics, home
appliances and furniture. However, deep discounts showed a significantly
lower impact on purchase decisions surrounding smartphones and vehicles
with only 66 percent and 55 percent of respondents saying they’d
definitely or probably buy these products if deeply discounted,
respectively.

Discount rates were selected based on discounts commonly observed within
each category, with deep discounts in home electronics, home appliances
and furniture at 40 percent, smartphones at 20 percent and vehicles at
15 percent.

Notes on Survey Methodology and Analysis

First Insight’s findings are based on a targeted sample of 750
respondents from three distinct demographics: Baby Boomers, Gen X-ers
and Millennials in the United States. The survey was fielded in March
2017 and was completed through proprietary sample sources amongst
panelists who participate in online surveys.

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.

Contacts

First Insight
Gretchen Jezerc
VP, Marketing and Product
Management
gretchen.jezerc@firstinsight.com
or
Media:
Berns
Communications Group, LLC
Stacy Berns/Michael McMullan, 212-994-4660