Customer Perception

Word on the street is that Wal*Mart is going to do away with the cut fabric departments in its stores, beginning with new and remodeled locations.  The company confirms that it’s making the change, but won’t discuss which stores are affected.  As you might imagine, this move has caused a lot of conversation on the sewing blogs, especially among consumers located in towns where Wal*Mart is rumored to be making the change.

Some of you may be directly affected by this change.  Many of you won’t.  I bring it up here because it’s interesting to see how some consumers are reacting.  Some are hopeful that the absence of fabric in the discount store will lead to a revival of the independent fabric store.  Others are concerned that they will have to pay higher prices.  It’s this perception of the dynamics of independent retailer vs. chain store that should concern all of us.

I’m going to quote from a blog posting by a consumer who falls into the latter group.  I’ve eliminated any references that might identify this lady or her location.  I’m sure that the writer means well and  represents the thinking of millions of other consumers.  She represents the "new consumer" whose voice can be heard over long distances via the internet.  Regardless of good intentions, these are the type of comments that can be very damaging to the independent retailer.  She writes:

"But remember, there are a lot of people out there that absolutely cannot pay
the higher prices independent fabric shops offer, and the independent fabric
shops can’t afford selling for less as
they don’t have the high volume
fabric purchasing ability that the larger stores do."

Face it.  This is a perception held by many consumers.  Small store = higher price.  Notice that the writer doesn’t present this as her opinion.  She states it as a fact.  She goes on:

"As an example, there was a place in (town) when I first started quilting.  Fabric there (and this was a LONG time ago –
say 25 years at least) was anywhere from five to ten dollars a yard. If you

went about ten blocks South, on the same street, there was a (chain store). I could buy the EXACT SAME MATERIAL there for $1.50-$2.00 per yard."

TWENTY-FIVE YEARS AGO??  Remember, we’re talking about perceptions here, not facts.  Something that happened to this lady in the mid-eighties has permanently affected her feeling toward independent retailers.

"The only advantage was that at times the (independent retailer) brought in some
beautiful fabrics …….. which could not be bought at
the larger store. But then the larger stores started carrying those fabrics, at a large
discount, and the (independent) went out of business."

Here’s the real key.  Obviously this consumer continued to visit the independent retailer to see new, "beautiful" fabrics.  Once the independent stores created a market for the new merchandise, the chains jumped in, bought large quantities which lowered production costs,  lowered prices, and grabbed the easy sales "and the (independent) went out of business."

The writer closes by saying, "You WILL be paying more for fabric. You WILL NOT have as large a selection."  [Emphasis is the writer’s, not mine.]

Clearly this last statement is false.  The chain stores have carefully created the myth that their prices are always lower.  As you know, and as we’ve discussed here before, the chains will always be lower on a selection of easily shopped items.  That’s how they create the illusion of across-the-board lower prices. 

As far as selection, the writer has said that the independent store used to carry "beautiful fabrics" that weren’t available at the larger store.  Of course, she expected to buy this special merchandise at chain store prices.

The new "social media" gives consumers what amounts to a 3,000 mile long back fence.  We can talk to our "neighbors" from border to border and coast to coast.  This can be a wonderful thing or it can be a nightmare, depending on the topic of the conversation.  People who get involved in on-line conversations are usually passionate about their subject.  They’re also very suggestible.  When one of them makes the blanket statement that "you WILL be paying more", her compatriots will take her seriously.  And they obviously have long memories.

There’s no way of knowing what experience this person actually had twenty-five years ago.  There may well have been a retailer in her town who was gouging the public.  It doesn’t matter.  She believes that independents charge more than chains and wants everyone else to believe it too.

So, how do we counteract this type of information?  First, we must be aware of what’s happening in the market, not just the market in our town, but the world-wide market represented by the internet.  We also have to be aware of what people are saying about our market, especially on the web.  We have to be aware of the price-sensitive items in our product mix and either price them competitively or not carry them at all.  We also have to be aware of what things are selling for on the internet.  It’s not  necessary to meet internet pricing, but we have to be aware of it and have a plausible explanation for the difference between our local price and the price available on the web.

Look at the big picture.  If the chain down the street sells item X for a dollar, for crying out loud, don’t try to get $2.00 for it.  Sell it for a buck (even if it costs you more than that) and have a better item, one that earns you a profit, available as an alternative.  Tell the customer why yours is better.  Explain the cost of ownership.  If they insist on the $1.00 item, sell it to them and try to sell them something else.  If that fails, then take the dollar, accept the fact that you won’t make a profit on everything you sell and be glad that this person won’t be spreading the story that your prices are too high.  She may become your best spokesperson. 

The other choice is to not carry item X.  The few sales you lose are certainly not worth the damage to your reputation that comes from being perceived as being "twice as expensive" as the chain store.  It’s worth noting that Home Depot, who certainly sells a number of "price sensitive" items at or below cost, reported an overall gross profit of 33.5% in fiscal 2005.  Obviously they sell many items at a much higher margin.

Finally, become an ambassador, not just for your own business, but for independent retailers in general.  Let people know, in your advertising, and in your day-to-day conversations, that your prices are competitive and your products and service are better than the chains.  Even when the sale is made, be sure the customer understands the extra value that she receives by shopping with you.  Never, ever let anyone leave your store thinking that your prices are too high, whether they buy from you or not.

Whatever you do, don’t just talk the talk.  Walk the walk.  Don’t buy your lawn mower at Wal*Mart and then wonder why your neighbor shops there.  From a creditability standpoint, I can’t imagine anything worse than running into one of your customers at the discount store.  And don’t have bottles of Wally World cleaning products sitting around in your store.  Remember, we’re all in this together.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: