Hitachi’s Gerald Grimes looks at how consumer behaviours have changed over the past few years, and how this will affect retailers in 2013 …
2013 could be a defining year for retail, with new figures from market research company, Mintel, showing that we can expect retail sales growth of between 2.5 and 3%. Although there are some positive indicators for the economy as a whole, success will depend on how we as a sector continue to adapt to the new norm of trading conditions and changing consumer attitudes to spending.
Evidence would suggest that those who have succeeded in expanding and increasing sales over the last few years are embracing the new attitude, with well-developed online and multi-channel strategies and a greater connection to the changing lifestyles of the great British consumer.
What makes the 2013 consumer tick?
Retail Week reported recently that there are signs retailers are seeing a subtle but important shift in consumer attitudes to the continuing tough conditions. Over the past few years, we have all experienced how consumers have adapted to the uncertainty, and, in general, it seems they are increasingly taking control of their economic situation, displaying more savvy and price-sensitive shopping behaviours.
“Experts believe shopping is shifting from an activity that takes place in physical stores or online to a value exchange that can play out in multiple new ways”
It is no secret that difficult times for the UK consumer are continuing, with research showing that the extra squeeze on household disposable incomes and volatility in the Eurozone mean trading prospects are tough.
However, musings from leading retail experts and trend authorities would suggest that, as many of you are aware, there are opportunities to exploit if we drill down and really understand our consumer, which will see us win through in challenging times.
Many consumers who have deferred big ticket purchases are finding ways to treat themselves to discretionary items that will offer longer-term satisfaction. Shoppers are choosing to save on everyday essentials such as groceries, opting for the value options, but saving to spend or taking out credit options on big ticket purchases for the home.
Lasting quality is becoming a more important feature in big-ticket purchase decisions, and is an important USP for the established players in the flooring market, as non-specialists increase downward pressure on retail prices.
Since it may take many younger consumers longer to get their first foot on the home ownership ladder in the current climate, communicating the concept of building up ownership of quality products for the home over time could also be viewed as an important consideration.
When deciding to spend their hard-earned cash, our 2013 consumer expects high standards of customer service, such as flexibility in delivery times and expert advice. How we as a sector develop our product range to suit a change in consumer lifestyles is key.
Market prospects rely on these changes in consumer living patterns and behaviour. The current opportunities to drive incremental sales and ‘reasons to buy’ include creating innovative products which suit smaller living spaces.
We as a sector have become much more savvy with our customer intelligence in a quest to win hard-fought sales.
As data analysis becomes more cost-efficient and more sophisticated, and consumers generate more measurable purchasing history data, brands will increasingly be able to predict individual customer behaviour, needs and wants, and tailor offers and marketing communications on a personal and precise level.
Marketing for the new norm
Although it looks like consumers will still be cautious and want to save in 2013, retailers can respond with an increasingly dynamic environment and a greater sense of theatre – it’s no longer just a place to shop, but an experience!
Shoppercentric, the shopper research expert, commented recently that due to the prolonged period of economic uncertainty, there has been a shift in the consumer mindset, and retailers are responding by using a range of strategies to persuade shoppers to part with their hard-earned cash.
Experts believe shopping is shifting from an activity that takes place in physical stores or online to a value exchange that can play out in multiple new ways. Thanks largely to mobile technology, there are now a host of retail channels available, which means brands can get increasingly creative in how and where to sell their products/services.
Reports have revealed that, in today’s digital world, we’ll place a premium on sensory stimulation so marketers will look for more ways to engage consumers in this way.
Whatever your target consumer, it seems that savvy behaviours are becoming ingrained and consumers are feeling increasingly confident about how to make the most of their squeezed income. Successful marketing strategies will focus on understanding shoppers’ needs, exploring what value means beyond price point, and looking to generate interest in-store through more creative retail environments and more interactive transactional sites and experiences online.
These trends will be underpinned by a small but significant shift in the consumer outlook, which has moved from fear of the financial environment to a resignation that the hard times are here to stay. As a consequence there is an acceptance by the public that life must go on and a concept of the new norm.
While this is hardly a ringing endorsement of a recovery, I believe it gives our sector a platform – if a fragile one – from which to build in 2013. As ever, the savvy retailers who understand their core customers and the rise of a new generation of switched-on shoppers will have an opportunity to capitalise and set themselves apart from the crowd.
Gerald Grimes is the MD of Hitachi Capital Consumer Finance, and chair of the Consumer Finance Committee for the Financing and Leasing Association. This article was originally published in Furniture News, issue 288.