A Buyer's Market: The Balance Of Power In Retail
NEAL CONAN, HOST:
This is TALK OF THE NATION. I'm Neal Conan in Washington. It's a buyer's world now, where the customer can sniff at 40 percent discounts, compare store prices to online offers, download a coupon and even cross the hallowed red line of the American retailer and haggle.
New technology feeds the competitive instincts of bargain hunters, and customers now hold new power in the age-old tug-of-war with sellers. So now the brick-and-mortar stores are racing to catch up.
Retailers and consumers, how has technology changed the balance of power? Call and tell us your story. 800-989-8255 is the phone number. Email us, firstname.lastname@example.org. You can also join the conversation on our website. That's at npr.org. Click on TALK OF THE NATION. Later in the program, Pulitzer Prize-winner Isabel Wilkerson on how Central Florida's racial history shapes its future.
But first, New York Times business reporter Stephanie Clifford joins us from a studio at the newspaper there in New York. Nice to have you with us.
STEPHANIE CLIFFORD: Thanks.
CONAN: And last week, you wrote a story about this shift. When did you first start to notice this?
CLIFFORD: Retailers started to complain about people coming into their shops, pulling out their iPhones or their smartphones and then scanning an item, scanning a bar code, looking online for a price and buying it from Amazon or from another low-cost online retailer as they're in the shop.
This started to be a complaint earlier in the year. What really brought it to a head was over Christmas, Amazon, the biggest online retailer, came out with a price-check app, and they said, hey, if you scan an item in a store, we'll immediately give you not only our lowest price but 5 percent off that lowest price just to get you out of the store and onto our website. And retailers went crazy over this.
CONAN: And so I can imagine that they did.
(SOUNDBITE OF LAUGHTER)
CONAN: And so what have they been doing - one of the things in your story, not just that, which is pretty remarkable in and of itself, but you detail people coming into stores and not, you know, Joe's Bargains, Brooks Brothers, places like that, venerable retailers, and saying, you know, I don't like that price. You know, I don't like that $30 shirt. I'll give you $24 for it.
CLIFFORD: Shoppers have this new moxie. They're emboldened by these price apps. They feel like they know what a real price is, and they know that they have an option. They can get it on eBay or Amazon if they don't like the store's price. So I gave the example in the story of a shopper who went into Shreve, Crump & Low, which I don't know if you're familiar with it, but it's this very tony Boston jewelry shop.
And he said: I'm buying, you know, these expensive clocks for wedding gifts at something like $300 a piece, and I'd like a discount. And the store said: Fine, sir, we'll give you 10 percent. And he said: Not good enough, I'd like 15 or 20, or I'm out of here. And the store agreed.
CONAN: And if this becomes public knowledge, you and me and The New York Times readers are the only ones who know - this is really changing things.
CLIFFORD: It is because retailers had this very standard way of selling things for - they have 10 weeks to get an item out the door. They would mark it up, you know, 65 percent to 70 percent, usually, to begin with and then mark it down over time. Shoppers are now saying: I know these tricks. I know this game. Let's forget all of that. What's the best price you can give me? And I'll go somewhere else if you can't.
CONAN: And we're not going to wait, and we know that one of the tricks you retailers use is to mark it up not just 65 percent but mark it up 120 percent and then say 50 percent off.
(SOUNDBITE OF LAUGHTER)
CLIFFORD: Right, and that's a very popular tactic. One company that did that for a long time is JCPenney, and they announced in January we are getting rid of those fake prices. They said that basically they've been raising prices for a decade, and, well, they'd raise prices something like - let's say the out-the-door price went from $20 to $50 - excuse me - the on-sale price went from $20 to $50, the shopper was still walking out paying the exact same amount. The shopper did not care about these markups.
So JCPenney said essentially we're going to try getting rid of that and doing just simple pricing that reflects the real value of an item.
CONAN: Simple pricing that nevertheless seems to be confusing everybody.
(SOUNDBITE OF LAUGHTER)
CLIFFORD: Yes, and still make some money, but...
CONAN: It's interesting, another approach, though, by another rather tony department store, Nordstrom's, which famed for its personal service, is now putting in computers that anybody can use to look up their - to check their email.
CLIFFORD: That's right. Nordstrom saw that its customers, especially younger customers, were coming in, and some did not want to talk to the vaunted Nordstrom salespeople at all. They wanted to look something up on their phone and get reviews there and then buy it immediately, literally with little to no interpersonal reaction.
So Nordstrom, sort of smartly I think, said fine, if that's what they want to do, we will go with it. They started installing iPads and computers in stores, where people can just come in to check email, or they can come in and buy something from a competitor's website. They say: You know, it's up to the consumer now what they want to do.
CONAN: Up to the consumer now what to do. That's a brave new world. Let's see if we can get some callers in on the conversation, 800-989-8255. Email email@example.com. We want to hear from customers and from retailers. How is technology changing the balance of power, and how have things changed since the old days? Let's see if we can start with John(ph), and John's on the line with us from Linden in Utah.
JOHN: Yes, I manufacture a product that's new, it's called Crio Bru. It's 100 percent cocoa that brews like coffee, and what's interesting is that because we're a new product, we have to sell online in order to start this new business. It takes really years to get into stores. And so to launch a business, selling online is one of the best ways to gain new customers.
CONAN: So you have to become not just a manufacturer but your own retailer, too.
JOHN: That's right, and so we definitely price our product in order to not undercut the retailers that we do have, but in order to sell this product across the country, we sell online.
CONAN: Not to undercut the retailers you do have, but you want to move product, too, don't you?
JOHN: That's right. So we price it about a dollar more than what it's sold at in the store because otherwise the retailers wouldn't carry it.
CONAN: Oh, so you're still - well, you're at that delicate phase of building up your product. John, good luck to you.
JOHN: Thank you.
CONAN: Paco Underhill joins us now. He's the founder, president and CEO of Envirosell, a market research firm in New York City, and the author of "Why We Buy: The Science of Shopping" and "What Women Want: The Global Market Turns Female Friendly," and he joins us from our bureau in New York. And Paco Underhill, nice to have you back on TALK OF THE NATION.
PACO UNDERHILL: Well, thank you, Neal, it's nice to be back on the radio with Stephanie, too.
CONAN: And as you look at this phenomenon, what Stephanie's been reporting on, one of the things that we're seeing is we used to think of the online world and the brick-and-mortar world as two different things, not so much anymore.
UNDERHILL: What we're calling it is convergence, which is the meeting of the bricks and mortar, the online world, facilitated by the smartphone, and that for merchants and marketers across the globe, the concept of having separate silos doesn't make sense anymore and that therefore we can look at the look and feel of the store and the look and feel of someone's online presence and look at those inconsistencies.
CONAN: And look at the - so they have to be consistent, not just in price but in what other aspects?
UNDERHILL: In language, in the way they're organized. It's telling that for many of the major merchants, there are many thousands of miles between their bricks-and-mortar headquarters and their online business.
CONAN: So those things have to merge, and convergence is going to be the new slogan. But consumers, this kind of power is unprecedented, no?
UNDERHILL: Well, let's recognize, Neal, we as a culture are over-stored. We could probably lose half of our retail space tomorrow and be a healthier nation and a healthier business community with it. We as American merchants have gotten addicted to the sale, meaning that the more we use it, the less it works and the more we need to use it.
I applaud the courage of JCPenney just to say let's call an end to this.
CONAN: It's interesting, Stephanie Clifford, the dependence on the sale, some places, even Wal-Mart is beginning to say, you know, we will not be undersold.
CLIFFORD: Right, they've started offering a price guarantee, which, granted, has a lot of restrictions to it, but they this Christmas season started saying bring in the lowest price from a competitor and we'll match it. People, the retailers are so anxious to get what little consumer spending there has been for the last couple of years that they have gone into this constant sale mode.
And especially if you watched it around the holiday season, which is when retailers make most of their money, it was 40 percent off and then 50 percent off and 60 percent off as the weeks led up to Christmas. It was quite intense.
CONAN: And at 60 or 70 percent off, they're not making any money, they're just moving product.
CLIFFORD: Yeah, they just need to get the items out the door so they can make the floor look good for the next season's product.
CONAN: Let's get Mark(ph) on the line, Mark with us from Norman, Oklahoma.
MARK: Hi, my name is Mark, thank you for taking a call.
MARK: I own a small technology company here called Norman Computers, and even since we had to start competing against the big online companies like Newegg and Amazon, you know, our retail market just got crushed. And what we had to do was use the retail as kind of loss leader and offer services and other things that the other companies weren't offering, you know, like, you know, 24-hour assistance, free diagnostics, that kind of stuff, and use the sales as kind of a loss leader because there's no way you can compete against the big stores online.
CONAN: So where do you make your money?
MARK: Well, we make our money on the service and, you know, by solving problems that nobody else can solve, and then we'll actually get referrals sometimes from, you know, from Best Buy or the big box stores because, you know, we'll fix stuff that nobody else can fix. But as far as the sales itself goes, there's no money.
I mean, you know, when I first got started in 2000, we could mark up our products, you know, 50 percent, 60 percent. Now we're lucky if we get a 20 percent markup, maybe 10 percent. And the other thing that we do is we'll just outright show them, hey, this is our wholesale price, this is our vendor price, and the vendors only mark it up about 5 percent. So if you're finding it online for less than what the vendors are paying for, you know, there's a change it could be a fake because, you know, in the computer industry, at least, there's a lot of fake product, you know, fake Cisco equipment, especially at the higher end.
Or they're sell factory seconds, factory thirds, just defective stuff. So it's a little bit of a roller-coaster, but as far as the legitimate product goes, there's practically no money. And so you have to innovate and find ways where you can compete where there's no other competition.
You know, we do that in the service industry, and we just use the parts just to get people in the door. Or we'll use the retail space as a loss leader to solicit corporate sales. You know, we do a, you know, do a good job fixing your computer really cheap, and then when the company's ready to buy a $10,000 network, you know, or some big database application, that's where we make, you know, our money there.
But as far as the retail for the small business, unless you're in a really niche market, you're just in trouble.
CONAN: Are you beginning to doubt whether you need that storefront at all?
MARK: No, I need the storefront. I did a study about two years ago, because we were looking at shutting it down and just doing nothing but corporate. And what we found is that it's great advertising. And even though - you know, because I lose probably about $2,000 a month out of my storefront, but I make up for it with corporate work, and people just like having a place where they can walk in and talk to somebody knowledgeable.
CONAN: Well, Mark, good luck, and thanks very much for the phone call. We're talking with Stephanie Clifford, business reporter for The New York Times, and Paco Underhill, author of "Why We Buy," about the revolution in marketing. Stay with us. It's the TALK OF THE NATION from NPR News.
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CONAN: This is TALK OF THE NATION from NPR News. I'm Neal Conan. Once upon a time, not so very long ago, customers on the hunt for big-ticket items sifted through the Sunday circulars and peered at the ads in the windows of their local stores hoping to time their purchase just right and get the best deal. If they didn't, they might never find out.
Now, of course, that's not the case. Customers turn to the Internet to comparison-shop for items large and small before heading out, or with the help of a smartphone, right there in the stores. If they don't like the prices in front of them, they can walk, and sellers know it. It's changed the way shoppers and retailers interact.
If you're buying or if you're selling, how has technology changed the balance of power? Call and tell us your story, 800-989-8255. Email is firstname.lastname@example.org. You can also join the conversation on our website. That's at npr.org. Click on TALK OF THE NATION.
Our guests, Paco Underhill, founder, president and CEO of the market research firm Envirosell; and New York Times business reporter, Stephanie Clifford. Let's go next to Paula(ph), and Paula's with us from Lansing.
PAULA: Hi. My granddaughter and I had just finished watching "Hunger Games," and so we swung into Schuler's to pick up the three-book pack, because she only read the first one. And they wanted $53 for it. And I whipped out my smartphone and popped it up. Amazon was offering it for $25. I asked to talk to the manager, and I said look, they're offering it for more than half off what you're offering. You know, give me a discount, and I'll buy it here; otherwise I'll buy it there.
And he said well, if you can get it better somewhere else, go ahead and feel free. And I said fine, and I walked out. On my way out of the store, I punched it in on Amazon, ordered it, and I had it two days later.
CONAN: What was the name of that store again?
PAULA: Schuler's, Schuler's bookstore.
CONAN: I think I may sell my stock. Paula, thanks very much for the call. And Stephanie Clifford, one of the things you wrote about was, in fact that retailers are giving clerks the authority to make bargains like the one that was denied there in Lansing.
CLIFFORD: They are. They're fighting back in a number of ways. So one is empowering clerks to make discounts of 10 percent or 20 percent, which clearly this store didn't and should have to make the sale. Some are getting more defensive. So we talked about the price scanners, which is when you use an iPhone app or an Android app to scan a bar code and bring up prices.
Best Buy has started replacing the standard bar codes with its own QR codes. So if you use a regular price scanner, it does not work on a lot of Best Buy's items, and that means you can't do price comparisons very easily. And other vendors, excuse me, other smaller stores are asking vendors to put in different manufacturing numbers or different item numbers so that people cannot type them into Google because you don't have a like-to-like comparison. It's a bit of a blowback from the retailers now.
CONAN: So they're trying to obfuscate to some degree.
CLIFFORD: Right, and some are even - a reader from Milwaukee wrote in to say that in Milwaukee, there are no cell phone signs in several of the stores, that they're trying to stop readers - or shoppers from doing that.
CONAN: And Paco Underhill, what is it doing to retailers' estimation on how their store has to change? Do they need more clerks, more people to help the customer or fewer?
UNDERHILL: I think one of the poignancies - we have done mystery shopping where we have gone in to stores and confronted clerks with price online coupons and stuff like that and seen how they've responded to it. And part of the problem is is that the troops that are out there in the aisles of the stores are completely frustrated because management isn't responding fast enough to the process.
CONAN: And so is management going to eventually have to say look, our margins are now so thin we can't afford to have that many people?
UNDERHILL: Well, I think there are a number of things that are going on. First of all, let's recognize that the major driver in American shopping is still convenience. And that whether I want it now or whether I'm willing to accept paying less prices for it and getting it tomorrow or the next day, is one of the tradeoffs that we have.
Second is that this works really well for commodity items. If I'm buying a refrigerator or a piece of consumer electronics, the sale generally involves three parts. The first part is doing some form of preliminary research. That increasingly is happening online.
The second part is actually visiting the product, which is I want to go into the store. And if this is something that's going to be part of my life or part of my kitchen or part of my home, I sort of want to see it before I buy it, because I don't buy this item particularly often.
And then the third part is the actual sale. And that part of what of what the merchant's process is, is have to understand at which mode is the shopper in and to be able to confront some of those commodity pricings, just as one of the earlier callers in did with some form of service or bundling option. So that if I'm selling you a refrigerator, it is a refrigerator with the inside of it customized based on the digital pictures that you bring in of your present refrigerator. So that the merchant at the point of sale is offering you something beyond the commodity product that Abe's of Maine or Amazon is in the business of selling you.
Those are all, you know, part of what the process is. Some of it is starting to conceive of the store as some form of catalog showroom. And that as I walk in the door, I have the option of the price right now, walking out the door with it; the price delivered tomorrow; or the price delivered next week. But that is clearly a transparency in pricing which we don't have now and that we probably need.
CONAN: Here's an email from Endo(ph) in Pensacola: We have two cars. When we bought our first one, we had just moved from the Philippines to Philadelphia. We walked into the car store, paid a down payment for what they told us the car cost. A couple of years later, we knew better. We had done our homework with the help of consumerreports.com. This time we walked into the car shop and told them we wanted this minivan with these features at this price. The salesperson consulted his boss for 15 or 20 minutes and came back to us in agreement.
It's interesting, Stephanie Clifford, one of the things you wrote about was I think it was a Land Rover dealership where they said it used to be a customer came in seven times before they bought, and now it's 1.7 times because they've all done their research online.
CLIFFORD: Right, and they - the president of Land Rover said that basically car shoppers want to go in and meet somebody once, just to make sure that if I have a problem, I can come back to you. If this car doesn't work, I know who to blame. Other than that, they want to do it entirely on their own.
So Land Rover has added all these online customization tools where you can configure your perfect Land Rover and add the wheels you want and add the color you want and do that, again, on your own ahead of buying anything.
CONAN: Let's go next to Andrew(ph), Andrew with us from Cleveland.
ANDREW: Yes, hi, Neal. I've used my cell phone in stores to kind of prove that old dark myth about retailers, especially with those retailers that are going out of business and having those mass liquidation sales at those amazing prices. The popular rumor is that they always mark those way up to mark them way down. And I've been proven 100 percent right by using my cell phone in a situation like that, in both, you know, I don't know if you want me to name the retailers, but Macy's and K-Mart, just to show the broadness.
I would walk up to a thing that I...
CONAN: Different ends of the spectrum, yeah.
ANDREW: Didn't really need to buy, but I thought, you know, I could use that around the house. I'll see what it's worth. I've checked it with my phone, and sure enough, the massive 40 to 60 percent liquidation price wasn't even close to the lowest price that I was bringing up just with a simple Google search.
CONAN: And were you using that app that Stephanie was talking about?
ANDREW: No, no, I was just...
CONAN: Just Googling, yeah.
ANDREW: I was just throwing an item number or a title in Google. And interestingly enough, as a paradox, you know, your other panelist mentioned consistency. Recently my wife and I, at a Kohl's store, bought a piece of furniture, a small piece of furniture on clearance for a great price. We got home and decided you know what, we could actually use two of these in the space, and we went back, and they were gone in clearance, and somebody said go check online, they might have some there.
We went and checked online. The only way you could get the piece of furniture that we paid $50 for was to pay $190 for it online. So there's a great example of a store that really needs to re-evaluate its consistency as far as its website prices were...
CONAN: I assume you decided one would be just perfectly fine.
ANDREW: I think we might even build a new one.
(SOUNDBITE OF LAUGHTER)
CONAN: Stephanie Clifford?
CLIFFORD: Yeah, if I could jump in. That's one of those things that's utterly befuddling to shoppers, and retailers have an explanation for it, which is that they keep - a lot of retailers keep inventory for the website separately from inventory for the stores. So you'll get different prices. You'll get out of stock online but in stock in stores, and it drives consumers crazy.
And retailers are only now starting to combine those two inventories, which is like, it's one of those back-end things that's so simple to a shopper, and the retailers are only now catching up.
CONAN: Paco Underhill, that's the consistency you were talking about precisely.
UNDERHILL: Neal, I think four years ago, I fell in love with a pair of shoes. And having been a reasonably liberal guy, my feet were really Republican. And I threw out my old loafers, and I bought a pair of ECCO slip-ons. And the first one, I paid 169 bucks for. And I went to the movies two years later, down at Battery Park, and slipped into a DSW and found that exact same pair of shoes for 72. Two years later, I was in the same theatre, slipped into the same store and bought that same pair of shoes for the third time for $24. Do you think I'm ever going to go back to buying those shoes for 169?
CONAN: I don't think so, but they may not make them much longer. If they're selling them for 24 bucks a pair, they - again, unless they're selling a zillion of them, they can't be making much money in that.
UNDERHILL: I think one of the things that the consumer fails to understand is that the merchant doesn't buy an item. They buy an order. So if somebody buys, let's say, 200 blouses and spends $50,000 on it, and then they manage to sell at least some of those blouses, and rather than the 50,000, they've got $70,000 in the bank. They can afford to liquidate the ones that are left. And that therefore what we see as the discount on the product, the merchant is simply discarding the end-runs of the order for whatever they can get for them.
And I think we, as a consuming public, are deeply confused about what value is. And that extends from commodity products to the clothing that we wear. And almost all of us have had the experience of buying something and celebrating how cheap it was or how much of a deal that we've gotten, gotten it home and realized that maybe it wasn't quite the bargain that we thought it was. And I'm certainly hopeful that we as consumers are waking up to the fact that we need fewer and better things, and that while we have to negotiate on the prices, we as Americans have gotten much too fat in our closets and fat in our bellies, and we all need to go on a diet.
CONAN: Paco Underhill, founder and president, CEO of Envirosell, a marketing research firm in New York City. His books include "Why We Buy: The Science of Shopping." Also with us, Stephanie Clifford, a business reporter for The New York Times. You're listening to TALK OF THE NATION, coming to you from NPR News. And, Stephanie, I just wanted to add to what Paco was just saying. Our choices were once limited to how far we can get on, you know, a couple of hours drive, or on the subway if you live in New York, or a bus trip. Now our choices are literally global.
CLIFFORD: They're global, and they're instant. And that's why retailers are having so much trouble kind of dealing with this. And Paco had mentioned earlier the idea of a commodity item and how easy that was to shop for. You do your research. You look at price, and then you order your fridge or your TV or whatever it is at the lowest price, usually. There's also another trend in retailing where retailers are trying to make their items not commodity items. And how do they do that?
It's by making them only available at Toys"R"Us or at Macy's or at Kohl's. So that's why you're seeing so many - let's take a Barbie doll, for example. You're seeing so many variations of a Barbie, where the pink hair is available at Kohl's and the red hair is available at Macy's. They all have these inclusives with the idea that that will help bring shoppers to their store and bring them to pay closer to full price.
CONAN: Or the George Schmidlap line, available only at Macy's, or wherever.
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CONAN: Here's an email from Byron in Philadelphia: Even if the retailer changes or removes barcodes, there are still apps that can be used to comparison shop. I use SnapTell, which lets me get online and local prices by just taking a picture of the item. Which reminds us, Stephanie, this is leapfrog technology. Whatever one store does, the app people are going to figure a way out of - to get around it the next day.
CLIFFORD: Exactly. And the customers will, too, even if the app people don't. Your one caller was saying he just enters the item number into Google. That can't be stopped by any retailer.
CONAN: Well, let's see if we can go next to - this is Mike, and Mike with us from Rochester, in Minnesota.
MIKE: Hi. I shop at Lowe's, and, you know, I try to always shop in the store, even if it isn't necessarily a local company to supports the employees from the town I live in. But I went and compared for a dishwasher at the store to see what one's the cheapest with my barcode scanner on my phone. It came up the cheapest at its own website. Now, the people in the store would not even match their own website price.
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MIKE: And then I ended up just buying it from the website, shipping it to the store - granted, Lowe's still got the money for it, but the local store did not get the money for it - and picking it up at the store myself.
CONAN: Paco Underhill, that defies the imagination.
UNDERHILL: I think it doesn't, because if we look at merchants outside the U.S., the concept of using the store as a pickup point for online services has been well accepted for many years. Let's remember that the cutting edge of shopping - and particularly the cutting edge of modern shopping - left North America a long time ago. So if you have a French grocery store chain where you order online and you make an appointment to pick it up, you simply drive up through the drive-thru. Somebody puts the bags in the back of your car, and off you go.
You have a Korean store where there are no products on the shelf, that you walk in to a place immediately adjacent to a subway station. You hit the objects on the wall. You enter them with your smartphone, and they're delivered either to your home or to a local point or the local store, where, again, you simply walk up, pick it up and leave. Let's remember, Neal, that globally, for most of us, if we ask you: Do you feel more time-poor or money-poor? The answer is still time.
And that one of the mental arithmetic errors that all of us are going through is, yes, we look at our phones and go, it's cheaper somewhere else. But we have to bargain in both the time, the inconvenience, often the gasoline to be able to figure out if it really is a savings.
CONAN: Here's a...
UNDERHILL: And then the other mention to it, which I'm - I think is the soft underbelly of all of this is that we seemed to accept the fact that what we see online is actually the truth. And increasingly, many of us are finding that what is quoted to us often comes to us with other hidden costs once we start doing the deal. And then we're stuck in the middle.
CONAN: Thanks very much for the call, Mike. We appreciate it. We've got so many questions. Paco Underhill, Stephanie Clifford, can you stay with us a couple more minutes more and take a few more questions?
CLIFFORD: Yeah, of course.
CONAN: Great. Thanks very much. So stay with us. We'll take a couple more questions on the developing change in the tug-of-war between retailers and customers. We'll also be talking with Pulitzer Prize-winner Isabel Wilkerson about "Warmth of Other Suns." She's the author of that book, but she's going to be talking to us about the changing nature of Central Florida. Of course, that's where the Trayvon Martin case is based. This is NPR News.
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CONAN: In a few minutes, we'll be talking about the racial past and the demographic future of Central Florida with Isabel Wilkerson. But first, we want to continue our conversation on the changing power in the retail market with Stephanie Clifford, the business reporter for The New York Times, who joins us from The New York Times' offices in Manhattan, and Paco Underhill, the founder, president and CEO of Envirosell, a market research firm in New York City, who's with us from our bureau in New York.
And I wanted to read this email that we have from Robert in Portland, Oregon: Didn't Woolworths invent a set price back in the 19th century as an attractor for customers who were sick of haggling? Are we going backwards, Stephanie Clifford?
CLIFFORD: We are going backwards - not only Woolworths, but Macy's tried a similar approach. He's referring there that the JCPenney approach announced in January, that they were going to simplify prices. Macy's tried a similar approach right after it, bought Marshall Field's and some other regional department stores that said we, too, will cut down on coupons. We'll get to a real price. It will reflect value. And after a year, it completely reversed on that strategy. It said, you know what? Customers really love coupons, and so we're going to back to the way of the coupon.
CONAN: Going back to coupons. Let's talk to Monica, Monica with us from West Hartford in Connecticut.
MONICA: Hi. This topic is great for me. I'm leaving the mall right now in disgust. I got a mailer from a store that I really like, and I saw a couple of items, and I thought, OK, I'll go to the mall. I went into the store, and I got completely snubbed. I'm looking for the item. I can't find it. There are lots of people working there, but no one paid attention to me. So I'm going home and I'm shopping online with a place that I know is great. They offer great customer service and free returns and free shipping.
CONAN: Paco Underhill, it seems that if any brick-and-mortar retailer wants to survive in this market, customer service of some sort has to be paramount.
UNDERHILL: You have to be able to meet the customers' expectation of service, meaning that if you're a full-price, quote and unquote, "full-price store," people expect more hand-holding than if you walk into Ollie's Bargain Outlet. So the challenge that we have in the world of retail is to meet whatever the bar is in terms of what customers' expectation is walking in the door. I think one of the interesting pieces to this is that the Internet is a very nice way of being able to facilitate customer service so that somebody has a question on the product, somebody whips out their iPad and goes to the store's online presence and says let's look at this together.
CONAN: Monica, what - was the store that you went to a full-market - a full-price kind of store? Or is it a discount place?
MONICA: No. Full, you know, regular-price store. A very well-known one, actually.
CONAN: All right. Well...
UNDERHILL: Shame on them.
CONAN: Shame on them. Monica, thanks...
MONICA: Yeah. I won't go back again. But thanks for the topic. It's great...
CONAN: All right.
MONICA: ...the discussion.
CONAN: Drive carefully.
MONICA: Thank you. Thank you so much.
CONAN: Here's an email from Ridge(ph): You know, people think they are so smart to shop a brick-and-mortar store than buy online. As a small retail owner in Chapel Hill, North Carolina, I think if this goes on, we retail owners will simply close our stores. Then folks can deal with product instruction, shipping, returns and other problems all on their own. Then we'll see how smart their phones are. I detect a little bitterness there, Stephanie Clifford.
CLIFFORD: There is a sort of moral question about this. Is it all right to go into a store -and I think it's particularly poignant with smaller retailers rather than big-box chains. Is it all right to go in, you know, use their services, use their staff, try out their bicycles or their books or whatnot, and then buy it online? A lot of people say, no. It's not OK. If you go in, you need to put your money where you foot steps are, essentially.
CONAN: So, as you're looking at the future, this is going to be a - well, as Paco said earlier, we are way overstored.
CLIFFORD: It's true. And that's a great point from Paco, that many stores are now starting to try out other, smaller formats, or to close down a lot of their stores as people go to malls a little bit less frequently and as a lot of the traffic goes to the Internet. So those stores that are remaining really have to do a lot of work to remain vital.
CONAN: Stephanie Clifford, great stuff. We really appreciate your time today.
CLIFFORD: Oh, it was fun, thanks.
CONAN: Stephanie Clifford who covers the retail industry as a business reporter for The New York Times with us from the newspaper's offices in Manhattan. Paco Underhill, as always, thank you for your time today.
UNDERHILL: Oh, it's a pleasure to be with you, Neal.
CONAN: Paco Underhill, founder, president and CEO of Envirosell, a market research firm in New York City, and author of "Why We Buy: The Science of Shopping," and "What Women Want: The Science of Female Shopping."
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