C Gopinath

Technology aids the savvy shopper

C. Gopinath | Updated on January 27, 2013 Published on January 27, 2013

In the current gloomy global economic mood, a closely watched indicator is whether we consume. If we consume more, there is more investment and production, and there are more jobs, and we consume more! Stimulus packages try to put more money in our pockets so we buy more stuff.

If Britain is a nation of shopkeepers, the US is a nation that loves to buy things. Shopping and consumption represents normalcy. Thanksgiving is a time to consume food, Halloween is a time to buy costumes and consume candy, Valentine’s Day is a time to consume chocolates, and the festival that has become the epitome of shopping and gift giving, of course, is Christmas.

The ‘holiday season’, the period between Thanksgiving in November and Christmas in December accounts for almost 40 per cent of a store’s revenues. And the figures are just out about what happened the last holiday season. The National Retail Federation has reported that November sales rose 3.9 per cent and December sales rose 2.1 per cent. Depending on the newspaper you read, you can believe the data to be promising (“Holiday shoppers propel retail sales”) or disappointing (“Holiday sales up only 3 per cent.”)

It is certainly the lowest increase since 2009. But it is not bad, considering that the government and politicians did what they could to dampen spirits with all their talk of fiscal cliff and economic uncertainty. As citizens, we have still kept the Buddhists at bay by pursuing goods and services, rather than happiness.

Apart from the nominal rise in spending, the trend of shoppers moving to the web to do their shopping has continued (non-store sales went up from 15 per cent the previous year to 16 per cent), and shoppers increasingly use mobile devices to shop and do research.

The online challenge

‘Black Friday’ or the Friday after Thanksgiving which fell on November 23 is usually the launch of the shopping spree for Christmas (the black referring to the promising colour of ink on the account books and not mourning!) and is a day that begins with major retailers offering select merchandise at very heavy discounts for limited periods of the day. You can get a TV for half the normal price and so on. People looking for these bargains even spend the night outside the store so as to be the first few to get in and claim the items. These are the ‘door buster’ deals – that you would be prepared to bust the door to get in.

Tragically, in 2008, a New York Walmart employee died when he came to open the door and was trampled as waiting shoppers rushed in.

When on-line (OL) retailers first appeared on the scene, the brick-and-mortar (BM) retailers fretted that shoppers would visit the store to look and try out the item but go home and order it on-line at a lower price. So, to beat back the challenge of OL retailers, this year the BM stores began using their own websites to offer the kind of discounts that OL retailers were offering. And to counter that trend, Amazon.com, the on-line giant, even offered customers a Price Check app so they could check on prices at Amazon while they were in a BM store!

Now, thanks to the power of analysis and access to information afforded by technology, OL and BM retailers constantly monitor the prices of their rivals and even use computer algorithms to design their reactive pricing strategies. This new game in town is called ‘dynamic pricing’ where retailers constantly monitor rivals’ pricing and alter their prices, sometimes several times in a day. All this is good news for the savvy consumer who can walk around in the store and check equivalent prices on the web, and decide where he or she gets the best deal.

Deals galore

This means that Black Friday, which was never a good time for profits due to the discounting but a way to bring in customers and build loyalty, is becoming even less relevant for profits and can soon be called Red Friday (ink, again).

Some BM retailers, rather than compete on price, try to secure healthy margins by offering items that are not readily or directly comparable. Other traditional forms of the battle continue. Major retailers who promise to match competitor’s prices ask you to bring an ad or a print-out to show that the same item is available elsewhere at a lower price, and they then match it. In some stores, you could come back later with the receipt and get a refund. Some stores also put a limit (always check the fine print) of the number of items on which you can get a refund, and so on. Some eager retailers, rather than wait for Friday, began offering deals on Thursday this year! And so the fight for your money goes.

Wanting to have a day of their own, OL retailers launched the Cyber Monday, the Monday after Black Friday, when they would attract all the attention. A new kid on the block is the Small Business Saturday, promoted by the bank and credit card issuer American Express since 2010 and meant to draw shoppers to BM small business that are also local to the community.

But, there is one thing that the OL retailers cannot match. The entertainment of being in a Mall on Black Friday and watching shoppers go crazy trying to get bargains. A friend tells me that he has been doing the trip to a local mall at 4 am these last few years because his kids think it is great excitement! Being saner, he just drops them and picks them up later, after he has had his coffee.

(The author is Professor of International Business and Strategic Management at Suffolk University, Boston, US.)

Published on January 27, 2013
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