Study Finds Extreme Shoppers Don't Harm Your Bottom Line
You know the woman fishing through a wad of coupons in her purse and holding up the supermarket line? She's one. So is the guy arguing for ten minutes for a 10 cent discount, or the gentleman who'll drive all the way across town for two for one tuna fish. We all know the 'extreme price shopper.' These folks may be annoying when you're stuck behind them in line, but do they hurt your business' bottom line?
Marketers have worried they do, but recent research from the Yale School of Management suggests they don't significantly impact profits.
This customer segment -- dubbed as 'devils' in retail -- has been widely speculated to be a significant drain on retailer profits. However, the first research to quantify their effect finds that they are only about 1% of a grocery store's customers and reduce the retailer's profit by less than 0.2%.The study, done by Professor K. Sudhir, is reassuring for retailers. But it also includes good news for consumers, especially for less than dedicated bargain hunters. Sudhir's work found:
Even a household that doesn't actively look for price deals typically ends up capturing about half of the potential savings created by market promotions.Which means that even if you show up randomly at one supermarket and put in exactly no research or price comparison time, you're likely to reap 50% of the benefits of the store's promotions. Nice.