1 Jun 2009

From the mouths of retailers

Following on neatly from our piece on M&S's Penny Bazaar initiative, a new survey of over 350 large and medium-sized retailers by The Centre for Retail Research has piqued our interest. It suggests that UK consumers are increasingly unwilling to pay full price for, well, just about anything.

  • 66% of the retailers surveyed felt that consumer expectations have changed so much that larger price cuts are required to achieve an uplift in sales
  • 33.2% reported that consumers are only buying discounted goods
  • 32.4% believed that consumers are making greater use of money-off vouchers
  • 23% said they have reduced all prices
  • 39% have already implemented significant targeted price cuts

Clearly, consumers now see bargains as the norm rather than the exception, which throws up some pretty big decisions for marketeers. Received wisdom from past recessions teaches us that reactive discounting will only temporarily solve the problem of declining profits. In his book 'Advertising in a Recession', Patrick Barwise points out:

"While it is generally accepted that promotions generate short-term sales, some of those sales are simply 'stolen' from future purchases by the same consumer...If a brand is on 'special' price too frequently, consumers are likely to think of the 'special' price as the normal price for the brand - and learn never to buy the brand unless it is discounted."

But as we are learning, this is no ordinary recession so maybe it's time to re-write the rules?

Our view is that in a bid to demonstrate value, marketeers all too often focus on price. Value is as much about quality as it is about price. Maybe now is the time to blaze your own trail and communicate your quality credentials instead?