Even at Megastores, Hagglers Find No Price Is Set in Stone

SAN FRANCISCO — Shoppers are discovering an upside to the down
economy. They are getting price breaks by reviving an age-old retail
strategy: haggling.

A bargaining culture once confined largely to car showrooms and jewelry stores is taking root in major stores like Best Buy, Circuit City and Home Depot, as well as mom-and-pop operations.

Savvy
consumers, empowered by the Internet and encouraged by a slowing
economy, are finding that they can dicker on prices, not just on
clearance items or big-ticket products like televisions but also on
lower-cost goods like cameras, audio speakers, couches, rugs and even
clothing.

The change is not particularly overt, and most store
policies on bargaining are informal. Some major retailers, however, are
quietly telling their salespeople that negotiating is acceptable.

“We
want to work with the customer, and if that happens to mean negotiating
a price, then we’re willing to look at that,” said Kathryn Gallagher, a
spokeswoman for Home Depot.

In the last year, she said, the
store has adopted an “entrepreneurial spirit” campaign to give
salespeople and managers more latitude on prices in order to retain
customers.

The sluggish economy is punctuating a cultural shift
enabled by wired consumers accustomed to comparing prices and
bargaining online, said Nancy F. Koehn, a retail historian at the
Harvard Business School.

Haggling was once common before
department stores began setting fixed prices in the 1850s. But the
shift to bargaining in malls and on Main Street is a considerable
change from even 10 years ago, Ms. Koehn said, when studies showed that
consumers did not like to bargain and did not consider themselves good
at it. “Call it the eBay phenomenon,” Ms. Koehn said.

“The
recession is helping to push these seedlings to the surface,” she
added. “It’s a real turnabout on the part of the buyer and the seller.”

John D. Morris, an apparel industry analyst for Wachovia,
said that the ailing economy was not necessarily forcing all retailers
to negotiate. But he says he believes that when there is an opportunity
for negotiation, the shopper has the upper hand.

“This is one of
the periods where the customer is empowered,” Mr. Morris said. “The
retailer knows that the customer is enduring tough times — and is more
willing to be the one who blinks first in that stare-down match.”

While
tough times give people more incentive to change their behavior, it is
the wealth of information about products made available on the Internet
that gives consumers the know-how to try it. People now can quickly
amass information on product availability and pricing, helping them
develop strategies to get the best deal.

Michael Roskell, 33, a
technology project manager from Jersey City, N.J., said he and a friend
from high school periodically visit electronics stores. While Mr.
Roskell expresses interest in buying an item, his friend acts as though
he is dissatisfied with the price and threatens to leave.

“We play good cop, bad cop,” Mr. Roskell said.

In
February, he said, the friends got $20 off a pair of $250 speakers at
6th Avenue Electronics in the New York area. Earlier, he and the same
friend negotiated to buy two 46-inch high-definition Sony televisions at P. C. Richard & Son, a New York-area electronics chain.

List price: $4,300. Price after negotiation: $3,305.50.

“My parents never did this,” Mr. Roskell said. “But once you get it, you realize there’s a whole economy built on this.”

The strategy can even work when buying pants. At least it did for David Achee of Maplewood, N.J., who said he went to a Polo Ralph Lauren
store in the SoHo neighborhood of Manhattan last month and became
interested in a pair of pants on the clearance rack for $75. He told
the salesperson that he had seen a similar pair on the Internet for
$65, adding that he thought the pair on the rack looked worn (even
though he did not really think so). He got the pants for around $50, he
said.

Among his other tactics, he said, he sometimes threatens to
walk out of a store and go to a competitor, as he did recently to get a
price break on a drum set at a music store. But, mainly, he relies on
researching prices and coming armed with information — prices he finds
on the Internet and in ads from competitors.

“You can negotiate, but you have to do your research,” said Mr. Achee, who works for the Port Authority of New York and New Jersey. “When I’m bargaining, I’m bargaining with information.”

Information
from the Internet helped Amber Kendall, 24, and her husband, Matt, when
they shopped for a camera last October. The couple, who live in Boston,
found the Canon
camera they wanted online for $350, then used the Internet price to
bargain with Ritz Camera, where the price was $400. Then they used the
Ritz Camera offer to get the same price at Microcenter, where they
preferred the warranty offer.

The technological influences are
not just on the consumer side. Retail industry analysts said corporate
retailers have begun using computer systems that let them do real-time
pricing and profit analysis. Such systems tell a company what price it
can set and still make money, and they illuminate the trade-off between
lowering prices and raising sales volumes, said Andy Hargreaves, a
retail industry analyst with Pacific Crest Securities.

Mr. Hargreaves did a little negotiating himself recently. At Best Buy last November, he bargained down the price of a 50-inch Samsung plasma television.

“They gave me a number. I gave them another number, and he gave me a
final number,” he said, noting that he got a $100 price break in
addition to the $200 sale discount. “A lot of people don’t realize you
can go into Best Buy and ask them for a lower price.”

Frederick
Stinchfield, 23, was a Best Buy salesman in Minnetonka, Minn., until
last January. He said about one-quarter of customers tried to bargain.
Much of the time, he said, he was able to oblige them, particularly in
circumstances where a customer buying electronics (like a camera) also
bought an accessory (like a camera bag) with a higher markup. He said
the cash registers at Best Buy were set up so that prices could be
reset at checkout.

Salespeople and managers had the latitude to drop prices, though some were more likely to do so than others.

His
advice for bargainer hunters? “If you get denied once, go looking for
someone else who looks nice,” said Mr. Stinchfield, who now works for
the federal government in Washington. He added: “Come armed with
information, and you will be rewarded.”

Priya Raghubir, a
marketing professor at the Haas School of Business at the University of
California, Berkeley, said that retailers willing to haggle were making
a calculated gamble that acceding to lower prices means establishing
customer loyalty. The retail mantra is “customer lifetime value,”
meaning any single sale might not be that profitable, but an enduring
relationship with a shopper would be.

There is just one problem with the theory, Ms. Raghubir said. It does not prove true over time.

Rather
than retaining customers, the rise in haggling is making shoppers
highly price-conscious and loyal ultimately to the least expensive
offer, not to a brand or a retailer.

Home Depot, among others,
begs to differ. Ms. Gallagher, the company spokeswoman, said that by
allowing salespeople and store managers to make some pricing decisions,
the company was creating a friendly environment that feels more like a
local store than a monolithic corporate superstore. (She declined to
say how much leeway individual salespeople or managers have.)

Ms.
Raghubir says that retailers are realizing that customers are going to
keep pressing them on price, because whatever reticence customers had
about bargaining has evaporated.

“In the past, when you tried to
get yourself a deal and it was an embarrassing thing — the kind of
thing you did if you couldn’t afford to pay,” she said. “Now it’s about
being a smart shopper.”

Thanks:Rab

Source:nytimes.com

www.nethaggler.com