Targeting the cost-conscious, empowered, digital-savvy customer in store
According to a recent Nielsen Global Survey, Australian consumer confidence is at its lowest levels since the GFC hit us a couple of years ago. Working in retail, we know that this news, as with the other prior premonitions, translates into a more cautious customer in store. Combined with the added uncertainty around how the digital landscape will shape up in the future, most retailers are working out how to navigate and yield results in what seems to be a new world – one where the customer is king (or queen), and technology has growing importance on the path to purchase.
In many cases, pricing seems to be the obvious and first step to combating the challenge from online retail and to reigning in a cost-conscious customer. But, marketers need to question the relevance of a strategy driven solely by price and aimed at an increase in short-term sales. How will it impact their long term brand value? Discounts, coupons and special deals are all great mechanisms to drive sales in store, but are they always the best strategy to engage the cost-conscious shopper?
US-based shopper research company MaxPoint Interactive recently deduced from a survey they conducted that the majority of respondents had made changes to their grocery shopping habits within the last year – becoming more cost-conscious before and during their trips. The survey also highlights how more shoppers were researching products online before purchasing them in store. Mums were also the most likely group of respondents to use digital methods to find recipes when preparing for a trip to the grocery store. These observations are not far from or different to the situation in Australia.
Knowing the challenges the retail industry faces, the question is how we tackle the situation and look at the opportunities that lay ahead. We need to constantly review shopper dynamics and understand the influencing factors – during pre-purchase, purchase and post-purchase – that drive decision making.
We recently attended the In-store Conference that took place in the UK and two key trends were highlighted as being key influencers behind shopper purchase patterns: product bundling and meal solutions. These aren’t new concepts and have been discussed in the past. However, a number of companies, both globally and locally, are underscoring the importance of bundling to their sales and marketing strategies as an opportunity in a tough, price-competitive market.
SPAR UK and Shoppercentric (a shopper insights agency in the UK) highlighted product bundling and meal solutions as both a driver of sales and the opportunity sectors. According to SPAR UK, for the convenience shopper that is driven by price, quality and range, meals solutions should deliver with good value, a treat factor, convenience, quality, product choice and health. If you were to read deeper between the lines, and psychoanalyse the expectations, you’d see that shoppers still want the drama, variety and joy with each meal, at a better (not necessarily reduced) price point.
In Australia, a report released in May 2012 by IGD Retail Analysis suggested that improving meal based solutions and occasion merchandising will drive growth and make the wider offer more compelling. According to IGD, there are signs of meal solutions becoming an increasingly prominent part of the offer but understanding the shopping mission is key.
Integration of products at point-of-purchase through clever use of modular systems and off-shelf placement is tantamount to getting meal solutions and product bundling right in Australia. A snacking station that combined drinks, chips, dips and salsa is a great example of how the marketers sought to build on the occasion of parties to bundle complementary products and give shoppers a complete meal solution.
Yes, shoppers are tight on budget and are more empowered with information. But, as an industry, it falls upon us to innovate, be more creative and work out how best we can attract them to the stores, steer them through the path to purchase and enable them to make choices that bring them closer to brands. Shoppers are in the driving seat, so work with them to provide the best tools that make their journey fun and memorable – but most importantly, profitable for you.