Specialty Stores Can Charge More, Study Finds
CREDIT: Specialty Store Image via Shutterstock
Specialty stores don't need to lower prices to compete with their bog-box competition, new research shows.
Researchers at the University of Buffalo found consumers not concerned about higher prices when shopping at specialty stores, and they are also more likely to purchase multiple items when there.
As part of the study, researchers analyzed data from 225 households, comparing candy sales in supermarkets to sales in specialized confectionary stores. They found that shoppers preferred buying premium items, like boxed chocolates, from the specialty stores and were not averse to paying higher prices for them in comparison to similar items at supermarkets.
In addition, the results showed that consumers were more likely to buy additional premium candies when at confectionary stores, compared to at the supermarket where they were less likely make any related purchases.
The study also discovered that promotions featuring sale prices at specialty stores don't have as great an effect on increasing sales as similar lower-price promotions at the larger markets. Instead, consumers responded more favorably to promotions featuring seasonal or holiday themes, such as Valentine's Day or Easter items.
The study's authors — assistant professor Ram Bezawada, professor Minakshi Trivedi and graduate students Ashish Kumar and and Karthik Sridhar — believe that specialty retailers can benefit from the study by adjusting their sales strategy to focus on premium selection, cross-category items and holiday promotions, rather than price cuts, to increase sales.