Study: Consumers pushed to lower-price stores

NEW YORK The weak economic conditions have taken their toll on U.S. consumers, and for the first time in more than 10 years, low prices is the main factor in determining what and where they shop. According to a survey by AlixPartners, a consulting firm, of more than 7,400 consumers, shoppers today especially keep low cost in mind when making purchasing decisions.

“In the ten years that I’ve administered surveys like this, consumers have always said that while absolute price is important, at the end of the day they were usually willing to pay a little more in order to get such things as service or a good overall experience,” said Fred Crawford, a managing director with AlixPartners. “However, this year, it’s a whole new ballgame. This year, consumers are saying it’s all about price, price and price. Clearly, 2008 will be ‘the year of value’ in U.S. retailing, and that’s going to have a dramatic impact on retailers of all stripes. This year is going to be batten-down-the-hatches time in retail.”

The survey found that pricing was important to consumers at all income levels, and all were likely to shift “one level down” in terms of the type of stores they shop, with aspirational high-end retail shoppers shifting down to department stores, department store shoppers dipping down into mass-market stores and so on.

“Consumers who were shopping at Nordstrom’s and Macy’s are now looking at JCPenney or Kohl’s,” said Crawford, “and those who were shopping at JC Penney are now at Wal-Mart, while some of those who were at Wal-Mart are now at dollar stores. You’re going to see a lot more Lexuses and BMWs in Wal-Mart parking lots going forward.”