Do Shoppers Associate Price With Quality?
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The Lifestyle Monitor asked consumers whether they agreed with the statement "higher-priced clothes are better quality than lower-priced clothes." In 2001, 35% agreed, but in 2002, the percentage dropped significantly, to 30%. This decline may be attributable to greater savvy among mass merchandisers in providing stylish, durable apparel at low prices. This strategy has enabled mass retailers to gain market share by luring select department, chain, and specialty store shoppers into buying most of their apparel in a lower-cost setting. The proportion of consumers buying most of their apparel at mass merchants has increased by 4 percentage points over six years, while the percentage shopping primarily at the other three channels has declined by 8 points.
Monitor data also show that shoppers are less likely to correlate price with durability or stylishness of apparel. Furthermore, shoppers at different retail channels are growing more similar in their attitudes. For example, when consumers were asked in 2001 whether higher-priced clothes were more stylish, the spread in responses among shoppers at different retail channels was 21 percentage points (35% for specialty stores to 56% for mass merchants), but in 2002, the spread shrank to 15 points (34% for specialty stores to 49% for department stores).
To increase margins, many retailers have focused on building their private-label business, including mass merchandisers, who have acquired well-known brand names and diversified their portfolio of offerings. According to industry sources, the number of brands purchased at Wal-Mart reportedly doubled from 1990 to 2002. Acquisitions included brands such as Faded Glory, Catalina, and White Stag, which once were national apparel brands distributed through other retail channels. Acquisition of these brands, coupled with distribution of well-known names such as Hanes, Disney, and, most recently, an extension of the Levi's label, allows Wal-Mart to offer a wide range of clothing at low prices. The same trend can be seen at Target, whose brand acquisitions include Mossimo and Cherokee. According to the Lifestyle Monitor, such acquisitions have most likely paid off: 78% of consumers state that the brand is more important than the retail channel in which it is distributed. Most consumers say that when a well-known brand once sold only at department stores becomes available at mass merchants, its quality remains the same. Only 15% of consumers say its quality declines, and 7% say its quality might even improve.
The conventional belief that consumers will pay more for higher-quality apparel is being challenged. Since the inception of the Lifestyle Monitor in 1994, consumers have been questioned about their willingness to pay more for higher-quality clothing, and the results have been similar to the trend in apparel prices—deflationary. In 1994, 64% of consumers were willing to pay more for higher quality, compared with 56% today. Consumers are choosing to forgo some degree of quality for lower prices. However, as mass merchants have become able to provide apparel of a quality that satisfies most consumers, and with over 80% of consumers now cross-shopping retail channels, U.S. consumers are coming to expect similar quality at all channels and across most brands. In 2003, the majority of consumers still are willing to pay more for higher-quality garments, but that attitude may be fleeting.
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