Heavy discounting putting independent PC retailers at risk

A new study shows independent PC/tech retailers that heavily discount prices do not enjoy better sales than those charging the highest prices.

The research, analysing data from the latest National Retail Price Comparison (RPC), from Target Components’ ShopTalk team, has found that the strongest sales performance is for indies who price in the middle.

Indies pricing in the extremes – the lowest 25 per cent and highest 25 per cent of prices (the lowest and highest price quartiles) – apparently enjoy lower and almost identical sales performance.

Across the 65 products and services surveyed, those in the lowest price quartile offer prices 32 per cent below average and enjoy sales satisfaction one per cent below average, whilst those in the highest price quartile charge 40 per cent above average pricing and also enjoy one per cent below average satisfaction.

However, ShopTalk also found that independent PC retailers are offering both lower pricing and a wider range of products and services than their multiple rivals. 

Data comparing over 100 independent retailers throughout the UK with the lowest online price from multiple retailers including PC World, Argos, Maplin and Tesco Direct, shows that indies offer on average nine per cent lower prices than the multiples, down from ten per cent last year. 

The results also show that on average, participating indies offered 48 of the 65 products and services compared with an average of 30 across the multiples.

Only PC World fared better than the indie average, offering 50 of the 65 items, albeit over half of the indies (55 per cent) offered more than 50. This represents a significant shift from the previous year, when only 25 per cent of indies offered a wider range than PC World.

Target Components MD Paul Cubbage said: “We know from our consumer research that people don’t believe indies offer lower prices than multiples, but we can see for the third consecutive year that they do. Perhaps more surprising is the breadth of range offered.

"As a consumer, you’re more likely to find the IT product you want in most local independents than you are even in the multiple with the widest range, PC World."

He added: "Consumers also benefit from a more sustainable indie sector, with indies offering lower prices and perceived benefits of expertise, service, customer care and so on. And since indies employ more people per £1 sales – our research suggests this is almost five times more than multiples – it’s a good thing for employment too.”

The full report is available on Shoptalk at www.targetcomponents.co.uk/shoptalk/research.asp