RSA RETAIL RESEARCH PAPER2 WEB HR.pdf

DO CONSUMERS REALLY
CARE WHERE THEY BUY?
WE TALK ABOUT ‘THE CONSUMER’, HOWEVER,
IT IS MUCH MORE COMPLEX THAN THAT.
Consumers have varying needs and wants at different times and
depending on how and why they are purchasing. However, there
are some trends that can be clearly seen from various research
papers and individual Retailer successes or failures. These are
forming invaluable reference points for the development of the
Retail proposition.
WILL THEY DELIVER VALUE FOR MONEY?
Consumers have always ranked value for their money pretty highly
in research surveys for Retailers, now it is a clear winner for many.
All indications are that consumers with disposable income are
making much more serious decisions about where they spend
it. ‘The basics’ are coming fi rst for product purchases, and many
‘value’ brands are going from strength to strength as a result. Those
endeavouring to show that they have ‘best prices’ or ‘best packages’
or ‘added value’ are picking up more regular consumers.
But it is not all about having the cheapest price.
A survey of 2,210 UK consumers conducted by Retail Eyes has
found that less than one in fi ve people (17 per cent) intend to
make purchasing decisions based on the lowest possible price.
Tim Ogle, CEO of Retail Eyes, says that rock bottom pricing is
not necessarily the best way to attract, and retain, customers.
“Our research has shown that 83% of shoppers are looking for
added value for their money. Obviously with their margins being
squeezed by rising costs, Retailers need to fi nd cost effective
ways to add value – one of which is through exceptional
customer service”.
Ref. Retail Eyes Jan 2011
Dealing and negotiating are absolutely on the agenda for the
consumer today. With increasing price comparison possibilities
through the use of the web, and encouragement from the media
and social media, consumers are becoming more courageous. In
some countries, consumers now see the face-to-face Retail store
as a way of bringing out their bargaining power. Some Retail brands
are encouraging this further with ‘money back guarantees’ where
lower prices can be found.
The categories customers are spending on are changing too,
refl ecting the more diffi cult fi nancial situations that consumers fi nd
themselves in. Consumers are spending much more on things they
need rather than things they want.
CAN I JUSTIFY THIS PURCHASE?
For a number of years there has been growing spending on ‘luxury’
items, or things that consumers want e.g. the new iPhone or iPad,
the expensive car or the designer handbag.
The implications of the fi nancial crisis and economic impacts have
meant a change in these patterns. This has not stopped consumers
buying luxury items, but it has, in many cases, resulted in a more
serious and discerning consumer selecting carefully their purchases
based on the perceived value and timeless nature of the item
they buy.
Consumers are thinking more carefully about their spending
on different categories and where they would prioritise their
own budgets.
ALLOCATION OF MONTHLY BUDGET
EXPAND
(10% INCREASE IN BUDGET)
Travel/Vacation 29%
Savings/Investments 25%
Recreation/Entertainment 20%
Dining Out 15%
Electronics & Appliances 14%
Apparel 11%
Medical 10%
Education 9%
Transportation 6%
Communication Services 5%
Food & Beverage 5%
Housing 1%
-2% Medical
-3% Housing
-6% Education
-7% Transportation
-8% Food & Beverage
-10% Communication Services
-10% Savings/Investments
-12% Recreation/Entertainment
-12% Travel/Vacation
-14% Electronics & Appliances
-18% Dining Out
-21% Apparel
CONTRACT
(10% DECREASE IN BUDGET)
Ref. Neilsen Global Online Consumer Confi dence Survey, Q3 2011
This research by Neilsen shows where, if consumers had a
contraction in their budget by 10% or an expansion of about 10%,
they would spend or reduce their budget.