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If You Don't Like Price, Negotiate
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Published: March 23, 2008
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 such as 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 they can dicker on prices, not just on clearance items or big-ticket products like televisions but also on lower-cost goods such as 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.
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 common before department stores began setting fixed prices in the 1850s. The shift to bargaining in malls and on Main Street, however, is a considerable change from even 10 years ago, 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," Koehn said.
John D. Morris, an apparel industry analyst for Wachovia, said the ailing economy is not necessarily forcing all retailers to negotiate, but he says he thinks 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," 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.
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 bargain hunters? "If you get denied once, go looking for someone else who looks nice," said 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 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, Raghubir said. It does not prove true over time.
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