People will pay for quality. Even during an economic crisis. Even when the people involved are self-described cheapskates.
The Times highlights a pizza joint in Brooklyn that sells slices for $5 apiece—roughly double the going rate of the competition—and yet has lines out the door. Why? Apparently it’s really good pizza, made with extra-virgin olive oil, San Marzano tomatoes, cheese from Italy, basil brought over from Israel:
A $5 Di Fara slice is thin and crispy, the dough a few seconds shy of burnt, topped with a tangy, subtle sauce, served on a paper plate, over a sheet of wax paper, in an overheated 44-year-old pizzeria with a worn floor, a drippy air-conditioner and a handwritten sign reading, “Bathroom is out of order.”
The point is: People wouldn’t buy the pizza if it wasn’t worth the money—at least they wouldn’t continue to buy it in the long run. Good products that are priced appealingly will sell, recession or no recession. Pricey fads, however, will disappear when cheaper, more attractive options present themselves to consumers. See two case studies of the recession, Netflix and Crocs, the former booming, the latter going bust.
Overall, I think shoppers are getting smarter during the recession. They’re realizing that, while there are things worth spending good money on, many times cheap is the way to go. A WSJ story about the supermarket business reveals that a few chains (Safeway, Supervalu) are hurting because they’ve been slow to discount merchandise—and shoppers have stayed away. Grocery stores that have been giving hefty discounts (like Stop & Shop), on the other hand, are doing relatively well during the recession:
In part, shoppers have been chasing bargains, visiting a variety of retailers and snatching up only low-priced goods. Now, about 1 in 3 shoppers buy exclusively items on sale, twice as many as 18 months ago, according to market research Information Resources Inc. As shoppers seek the best deals, retailers with low price reputations are posting strong same-store sales while other grocers are scrambling to find a new game plan.
Whatever that new game plan is, smart shoppers will have to come up with their own new game plans to counteract the supermarket’s game plan. I’m hungry. I think I could go for a slice.