LBU Together

Lifting the lockdown: Pricing perceptions and the paradigm shift

Following the gradual release of the lockdown, hairdressers and pubs, amongst other businesses, are opening their doors again and welcoming back customers. Some people are desperate to get back into these ‘non-essential’ spaces, to be pampered, to have fun and to leave the confines of their immediate environment.

I spoke to Toby Foster today on BBC Radio Sheffield about how customers will feel about paying higher prices for goods and services. Maybe a cut and colour will cost a little more, or to buy a meal and a pint, customers will have to dig a little deeper. It seems customers have returned in some cases, to be confronted by huge price increases, which seem disproportionate and unfair.

It is hard to overestimate the impact that the lockdown has had on our sensibilities. As it is lifted, many of us are experiencing a psychological dilemma.  On the one hand we really can’t wait to go back to the hairdresser to be pampered or the pub to meet with friends. On the other hand, there is fear and anxiety of the perceived barriers, such as restricted movement enforced by social distancing,  the mandatory wearing of facial coverings, the removal of all magazines and the absence of refreshments at the hairdressers. To visit the pub again might mean we have to book in advance, sit at a table and let people know when we need to go to the loo. The menu choice might be reduced, and the staff might look a bit weird because they’ll be wearing visors. Customers might be anxious about what to expect, or that this would lead to a loss of buzz and atmosphere.

Along with this dilemma, our experiences during lockdown have taught us new behaviours. For instance, the packet of home hair dye has been found to be fairly satisfactorily and good value. Drinking and seeing friends in the garden, made possible by the beautiful sunshine, has been an enjoyable substitute for gathering at the local. Furthermore, these alternatives have saved people money, so they have more left over in their wallets. Therefore, there is uncertainty amongst individuals about whether they will need or want to go back to hairdressers or pubs. Indeed, they are asking profound questions about where, why, what, when and how they will spend their time and money in the future. The lockdown has for some caused a psychological reset, with individuals asking themselves what value means and maybe reconsidering how they will spend their money.

If, on top of this paradigm shift, there are hefty price increases, that seem unfair and disproportionate, there is a danger that these people will change their behaviour permanently or go elsewhere.

It will be those businesses that have nurtured their customers by keeping a dialogue with them via social media, email or text, during the lockdown, which will maintain the strongest loyalty and fandom. By keeping in touch and telling them what’s going on, making them feel valued, showing that they have missed us as much as we have missed them. If, on top of this, they are open, honest and transparent about any price increases, customers will be understanding and happy to pay. Customers understand that businesses have had to buy PPE, hand sanitiser, screens, signage and perhaps have extra staffing costs, that hairdresser have had to invest in disposable gowns and towels. They also know that capacity is lower due to social distancing and how all of this impacts the profit margins.  As long as price increases seem fair, for example a standard fee to all customers, this will not be a problem.

However, after this extended period of contemplation about our lives and our values, any business that is perceived to be putting profit over and above customer relations will soon be ousted, and they will go elsewhere. This is a highly competitive business environment and customers can choose to undergo a behaviour change, such as dye their own hair at home to replace the hairdresser, or buy their own beer from the supermarket and drink at home to replace the pub.

The deepest and most resilient relationships are emotional ones. Businesses are no different. Like individuals they need to work at these relationships. Organisations which will weather the Covid-19 virus storm best will be those organisations that express how much they value their customers, and in return, their customers express how much they value them by being loyal. They will be rewarded by brand love and deep loyalty, which will see them be profitable and successful into the long term.

Dr Esther Pugh is a Senior Lecturer at Leeds Business School at Leeds Beckett University. Her PhD is on vintage fashion fairs and the unique magic they weave in physical but temporary spaces. Esther's research interests are fashion retail, consumer behaviour, visual merchandising, retail experience, spaces of consumption and consumer culture. Her career prior to entering academia was in fashion retail, as Visual Merchandising Manager with high street multiples, Oasis and Coast. Esther has also run her own vintage fashion business and continues to maintain a keen interest in the vintage fashion phenomenon.

Dr Esther Pugh

Senior Lecturer / Leeds Business School

Senior Lecturer in Business Strategy and Marketing. My PhD combines Critical Spatial Theory and Consumer Culture Theory in the context of Vintage Fashion Fairs. Future research interests are the role time, space and 'moments' in shopping, the role of physical space and how to improve space to make it more experiential.