In an economic climate seeing high inflation rates continuing to rise and corresponding cost of living rates at near-suffocating levels, Australian consumers are more cautious than ever about their spending, and increasingly on the hunt for opportunities to save.
Ultimately what this means for retailers hoping to navigate the tough economic conditions, particularly in the lead-up to the festive season, is an enhanced need to recognise the opportunities presented by sales events in reaching consumers. This is particularly true in areas of retail typically categorised as encompassing discretionary spend, such as fashion retail, electronics and entertainment.
In the recent National Retail Association (NRA) consumer sentiment report, greater than 70 percent of consumers surveyed reported that they have changed their spending behaviour due to inflation and related economic factors, with 62 percent of consumers suggesting that they plan to seek out sales and discounts at a greater rate than previously.
This coincides with 54 percent of consumers seeking to spend more time researching product pricing, as consumers seek to track down the best deals and discounts and eschew brand loyalties to take advantage of savings opportunities.
And as a result of their changed shopping behaviours, cutting on immediate spending to prepare for future chances to save, 20 percent of consumers are reported as suggesting that they plan to spend more during the upcoming retail sales events period than in previous. Planning ahead for this period, too, 35 percent of consumers plan to take advantage of sales during Black Friday and Cyber Monday on top of 25 percent of consumers planning to spend during the Click Frenzy event as recorded in the NRA’s report.
In findings from Power Retail’s most recent Trajectory Report, surveying consumers in late September, 28 percent of respondents indicated plans to increase their online spend in the month of October compared to 19 percent planning to decrease their spend. Of those planning a decrease in online spend, 60 percent flagged plans to save for essential items as their primary reason, while half of all those planning an increase in spend reported planning to take advantage of bargains.
Overwhelmingly, it is clear, consumer insights show spending behaviours centred around saving and penny pinching in the short term in order to prioritise spend during sales events as to ultimately save on costs. For retailers, taking part in these sales events and putting opportunities for consumers to save front and centre is more important than ever before, as is recognising that brands can no longer rely upon consumer loyalties in ways they might have before as consumers pivot away from such loyalties in search of opportunities to save.
“Shoppers are likely to reconsider familiar channels, with price and value to become key drivers of change,” says shipping platform ShipStation, “In response, businesses will have to put value for money at the heart of their proposition to attract customers and preserve loyalty.”
This is a reality agreed upon by cashback rewards program Cashrewards, with the brand’s Chief Marketing Officer Nicole Bardsley saying in early September, “We are living in the era of a savvy, value-conscious shopper who knows how to thoroughly research their options before making a purchase, [and] with Australian confidence levels dropping and the increasing worries about the cost of living, Aussie shoppers will become even more offer and savings focused.”
Ambiguity about what retailers should be looking to do is essentially non-existent, particularly for retailers operating in categories dealing in products and services falling under the umbrella of discretionary spend. If these retailers are hoping to reach the modern consumer, embracing sales events and meeting these consumers where they are now is imperative to retail survival much more than it is simply just a good idea.
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