Value Proposition in Multichannel Retailing

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The value proposition in multichannel retailing It might be a retailer’s worst nightmare: a consumer stands before a wall of flatscreen TVs, contemplates a purchase, and pulls out a smartphone to see if a better deal is available elsewhere. This increasingly common sight may heighten retailers’ fears that they are caught in an inevitable race to the bottom on price. Yet while price competition is tough, our consumer research and client experience show that perceptions of value still matter in the ever-more-complex multichannel-retailing environment. Retailers can employ proven tactics to shape perceptions and take advantage of the fact that consumers care about more than just the price tag when they buy. Price is just one of a range of factors consumers take into account when buying products: they also consider the degree of trust they have in a retailer, its product assortment, and their previous buying experiences. So even in the most competitive product categories, such as consumer electronics, retailers can look beyond price and actively shape perceptions of the value they offer. None of this happens by chance; retailers can implement strategic moves to get credit for superior value. Consider, for example, how consumers view leading sellers of women’s apparel in the United States. While actual average prices at Kohl’s and JCPenney are similar, consumers clearly perceive Kohl’s as offering lower prices.—which typically has among the lowest prices in categories such as consumer electronics—charges more for similar types of apparel than Kohl’s and JCPenney do, yet retains a “halo” of value among the consumers we surveyed. It has been found that retailer can use certain pricing moves to play the value card. The first is identifying key value items—products that have the greatest impact on value perceptions. In consumer electronics, for example, flat-screen TVs and computer hard drives are hot-ticket products that draw customers to stores or Web sites....
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