You can fix your prices. But can you fix your price image?

Welcome to the third edition of Retail Best Pricing.

Being cheaper is easy to measure. Looking cheaper is much more difficult.

A retailer can reduce thousands of prices and still be seen as expensive. Another retailer can have higher prices on many products and still have a strong low-price image.

That is the Price Image Paradox.

And price still matters a lot. In 2026, Capgemini surveyed 12,000 consumers across 12 countries: 74% said they would switch brands for lower regular prices. But the same study shows that value is not only about price — quality, transparent pricing, consistent policies and clear communication also shape perceived value.

Source: Capgemini Research Institute — What Matters to Today's Consumer 2026.

1Price position is not price image

A Price Index can tell you if your prices are lower or higher than your competitors. But it cannot tell you if customers believe you are cheaper. There is real evidence of this.

McKinsey compared actual prices with consumer perceptions across US retailers — 6,000 consumers, more than 1,100 products and 20 retailers.

The price checks were made in September and October 2010, so this does not describe these retailers' positions today. But it demonstrates an important mechanism:

What you charge and what customers think you charge can be very different.

Source: McKinsey & Company — The Value Proposition in Multichannel Retailing, 2011.

2The prices that really matter

Customers do not give the same importance to every price. McKinsey's 2026 grocery research makes this very clear.

For soft drinks, laundry detergent and snacks, the figure was only 20–23%. This changes the pricing question.

Source: McKinsey & EuroCommerce, The State of Grocery Retail 2026.

3More promotions, better price image?

Not necessarily. Today, 1 in 4 FMCG units in Western Europe is sold on promotion. But NIQ finds that promotional pressure is increasing while unit growth is slowing.

More products are on deal, but promotions are delivering less incremental volume. NIQ says promotions are increasingly supporting demand rather than stimulating it.

There is no universal answer — but more promotions are no longer a reliable path to growth.

Source: NIQ — State of Price and Promotion in Western Europe 2025, analysis published February 2026.

4What happens when prices are almost the same

France gives us an interesting example. In September 2026, UFC-Que Choisir compared prices across more than 4,500 supermarkets and hypermarkets with drive services.

When the actual price gap is large, price position itself is a major differentiator. When prices are extremely close, our take is that price image can become a stronger source of differentiation — shaped by communication, KVIs, promotions and previous customer experiences.

Source: UFC-Que Choisir — Supermarket Price Ranking, September 2026.

5Five ways to close the price image gap

So how can retailers bring price position and price image closer together?

1 — Focus on the prices that matter. Do not try to be the cheapest on everything. Find the products customers use to judge your prices: 47–52% put milk, chicken, ground beef or eggs among their five biggest value signals, and 81% of grocery executives will prioritise KVIs.

2 — Make your best prices visible. A good price that nobody notices has little impact on price image. Co-op's Aldi Price Match checks Aldi prices twice a week, updates matched Member Prices weekly, and shows the proof with an Aldi Price Match badge on shelf edges and online. The price is the first step; the proof must be visible. (Source: Co-op — Aldi Price Match terms, 2026.)

3 — Be consistent. In McKinsey's 2026 grocery survey, 60% of consumers said getting good value had become more important than a year earlier, and 71% prefer lower, consistent everyday prices to frequent promotions with higher base prices. A price image needs to be reinforced again and again. (Source: McKinsey — State of Grocery North America 2026.)

4 — Measure perception, not only price. Your Price Index tells you where your prices are, not where customers think they are. Measure both: Price Index + Price Image. Track competitors, but also measure customer perception regularly.

5 — Think value, not only price. Price is powerful — 74% would switch for lower regular prices — but quality, transparent pricing, consistent policies and clear communication also drive perceived value. Being cheaper is not always enough. The price is only one part of what the customer buys.

6Pricing Fight Club: Amazon 🇺🇸 vs. Temu 🇨🇳

What does "best price" really mean? Amazon vs Temu looks like a price fight — but it is much more than that, because customers do not buy a number. They buy everything that comes with that number.

Round 1 — Price. A cheaper similar product is not the same as a cheaper identical product. A €7 item on Temu and a €12 item on Amazon do not prove a 42% price difference if they are different products. For competitive intelligence, matching quality matters as much as price collection.

Round 2 — Value. Price and value are not the same. The customer is not only asking "How much does it cost?" but also "What do I get for that price?"

Round 3 — Delivery. Only 10% of grocery consumers preferred a limited assortment delivered in under 30 minutes; 90% preferred a wider assortment delivered the same day. Speed is not the only part of value — customers trade speed against choice, convenience and price. (Source: McKinsey Grocery Consumer Survey, March 2026, n=4,989.)

Round 4 — Trust & experience. Amazon kept a strong value halo even when its actual prices were higher on the apparel studied. Trust, assortment and previous buying experience all shape price perception, not only the price tag.

Round 5 — Audience. In France in Q2 2026, Amazon had 41.2 million monthly unique visitors versus Temu's 21.3 million. Temu's monthly audience fell 12.7% from Q1, but its average daily audience rose from 4.0 to 5.4 million in a year.

Sources: McKinsey Grocery Consumer Survey 2026; McKinsey 2011; FEVAD / Médiamétrie, Q2 2026.

So what is the "best price"? €9 with slower delivery? €12 delivered tomorrow? €10 from a retailer you trust? €8 for a similar product instead of an identical one? These are illustrations, not universal answers — and that is precisely the point.

The lowest price is not always the best price.

The Retail Best Pricing take

The data tells us three things.

① Price position is not price image. Similar actual prices can create very different perceptions.

② Not every price has the same impact. In grocery, 47–52% of consumers identify products such as milk, chicken, ground beef and eggs among their main value signals.

③ Value is bigger than price. Across 12,000 consumers in 12 countries, 74% would switch for lower regular prices — but quality, transparent pricing, consistent policies and clear communication also shape perceived value.

So perhaps the most important pricing question is no longer "Are we cheaper?"

It is: "Do our customers believe we offer the best value?"

Retail Best Pricing is an independent retail pricing community. Published on PAARLY.com with permission from Retail Best Pricing. © Retail Best Pricing.