Would you rather do your shopping at a retailer who offers consistently low prices or make your purchases at a store whose prices are high but runs an occasional sale? While cheaper prices might sound better, businesses that offer the higher prices are more profitable. Management professors who work at the University of Texas in Austin and MIT (Massachusetts Institute of Technology) made the recent discovery.
According to the news report, two types of regret are felt with respect to shopping. One type happens when a consumer buys an item of apparel, for instance, and then discovers it on sale later. Another regret happens when a consumer does not buy clothing, for example, and later returns to find that their size is no longer available.
According to the research, the fear that an item will be bought and not replenished is great enough for a shopper to pay full price when he or she first discovers something they want to buy. That kind of response can increase a retailer’s profits by as much as 10%. The researchers add that the technique of maintaining higher prices works better for some sellers than it does for others. Shoppers, say scientists, have an easier time waiting for a sale if the item is common, such as a t-shirt.
When fashion or items are branded then, not buying the clothing or products can trigger a fear of regret. Plus, certain brands offer more incentives for a shopper to buy. One case in point is the brand Zara. The reason purchasers pay more for the brand is Zara’s tight supply chain. Scarcity can greatly influence buyer behavior and Zara uses this incentive. Therefore, the brand is regularly successful in promoting full price purchases. When it does have a sale, Zara usually marks down the price by about 15%.
To overcome buyer’s regret and not get caught up in paying full price, researchers suggest shoppers look at the price first before surveying an item. One recent study found that seeing the product before looking at the price makes a person focus on how much they like an item. If they look at the price first, however, they will more closely scrutinize a product’s value.