RETAILWIRE DISCUSSION TOPIC
The Fine Art of Haggling – 1/22/08
While common in many foreign countries, haggling for most Americans is reserved for major purchases such as cars and houses. However some are finding better deals by haggling over credit card rates, hotel rooms, medical bills, gym membership fees, as well as at retail. Discussion Question:
Is haggling more common than thought across retail? Do you think haggling is positive or negative for retail?
In a difficult economic cycle, the incidence of haggling will increase in all retail environments. However, unless a retailer’s selling culture is set up for haggling, the results will always be negative for the retailer and often negative for the consumer. It is negative for the retailer’s profits because their margin expectations don’t take haggling into account and negative for their sales associates and managers who are unprepared to deal with often-difficult hagglers. It can be negative for the consumer because even if they get a lower price, the process of haggling with an unprepared associate will likely be acrimonious.
Politely asking about pricing options, particularly for more expensive items, is smart consumer behavior. However, haggling in environments not set up for it is just adding to an already-difficult relationship between customers and retailers.
There could be an opportunity for a retailer to set themselves up as a haggling, bazaar-type environment that caters to people who like to shop this way. I doubt, however, that this can be done profitably over many locations due to the difficulty of training this type of selling effectively. An opportunity for single-unit retail entrepreneurs?
Personally, I like shopping where I am confident that the marked price is an acceptable value, and haggling is by definition unnecessary. Costco is the king of projecting this perception.
Mike Osorio, your Dare to be Contagious! strategist
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