Price discrepancies on the retail shelf signal a surprising lack of perspective about those who make most of the household shopping decisions. It also calls to attention a long-standing issue that demands rectification, and retailers can use their data to make those first steps.
This is not a retail story; it is a misplaced opportunity story.
A four-pack of CVS-branded, three-blade disposable razors for men costs $4.99. A four-pack of CVS-branded, three-blade disposable razors for women is priced at $6.99. Elsewhere, at Abercrombie & Fitch, a logo tee will set a man back $30, but a woman will pay $40.
As the New York City Department of Consumer Affairs (DCA) has figured out in an examination of roughly 800 products that come in both male and female versions, a range of female products, from toys to shampoos, cost more than similar products for males, yet may vary only by color. This is price discrimination. Or, as some have coined it, a “gender tax.”
Photo credit: NYC Dept. of Consumer Affairs
“DCA found, on average, that women pay approximately 7 percent more than men for similar products,” the report states. These price differences, it concluded, are “largely inescapable.”
The findings that many female products are priced higher than similar male products should not be a complete revelation. It has been well documented that women pay more for many services, such as car repairs and dry cleaning.
However, the extension of price discrepancy to the retail shelf signals a surprising level of tone-deafness when it comes to those who make most of the household shopping decisions. It also brings to the fore a long-standing issue that demands rectification.
Retailers have a short window of opportunity to turn this potential PR debacle into an opportunity. The first step to doing that may be mapped out in their data.
“Females … Absorb More Cost”
Retail and manufacturing data does, for example, guide the product development that factors into pricing decisions.
Indeed, the DCA review concludes that both manufacturers and retailers – not one or the other – make the choices that result in higher prices in female products. The increases range from 4 percent for children’s clothing to 8 percent for adult clothing to 13 percent for personal care items.
There are variables, such as ingredients and manufacturing costs, that affect price estimations, particularly of personal care items. According to the report, the major cost consideration is research and development, and in some cases a female product may require more R&D than a similar male item.
But this is not always the case, and the upshot is that women cannot avoid the higher prices: “It appears that female consumers absorb more of these costs than male consumers, rather than the costs being distributed equally,” the report states.
Data Can Bridge The Gap
While manufacturers as well as retailers control that cost distribution, retailers can take greater control of managing the prices their female shoppers pay.
The most straightforward way is to simply adjust the prices on the shelf, but such an undertaking would take time as sales forecasts, pricing models and promotional schedules would have to be managed. However, in the short term retailers can launch a number of efforts that provide female shoppers better deals while also communicating how important they are to the brand. Following are four.
Priceless experiences: Retailers can connect with segments of shoppers by offering invitations to events that are free but rich in experiences that fall squarely within a customer’s interest. If the retailer seeks information about customer interests outside of the store, such as through a survey or through social media, it can create a series of events that transcend price. A drugstore chain can, for example, host a women’s walking club that includes leaderboards so loyalty members can join competitive teams. The retailer could kick in for shirts and milestone events as well.
Personalized pricing: More retailers are using their loyalty programs as vehicles through which to send one-to-one special offers that are evident only to the targeted shopper. These offers, often sent by smartphone, can reach the consumer right in the aisle where she is in the best position to take advantage of the opportunity. Paired with iBeacon technology, these offers can further reach the shopper when she is within eyeshot of the product. The added benefit of these private prices is competitors cannot see and match them.
Partner with Vendors: Both retailers and manufacturers play a role in how prices are determined, so perhaps they need to work together to make prices fair for both genders. By sharing data, it may be possible for retailers to help the vendor community identify adjacent products that their relevant customer segments are buying. This could lead to product expansions that would create new revenue streams for both parties. Additionally, this shared data could help them develop new pricing strategies that balance what consumers are willing to pay across a number of categories – which could eliminate the gender discrepancies.
Reach out and fix it: Lastly, perhaps the right thing for retailers and manufacturers to do is just take the hit. If it is that simple to see where price discrimination exists, then they could make the good-faith effort to rectify the situation. They can, for example, issue coupons for those higher-priced items or calculate the value of those price differences in rewards points and surprise shoppers with a range of bonuses.
Getting in front of the issue will build trust and reinforce brand integrity at a critical time. Combined with relevant messaging that is informed by the data, it also could help retailers make the most of a fleeting opportunity.
