Understanding Shoppers’ Behaviour in a recession

Shopper behaviour in a recession is very different from that displayed
in boom times, shifting to a much greater focus on price comparisons,
promotions and on actively seeking real value for money. Price inflation
is being constrained in the current deepening recession and price is
becoming increasingly critical in both emerging markets and in mature
markets where rising unemployment is hitting disposable incomes. But for a
large proportion of Shoppers, the impact of recession is largely a matter
of confidence rather than actual hardship e.g. choosing to repay debt
rather than buy goods. For them, their purchasing decisions focus on the
enduring essentials of a brand’s perceived performance and value and
on the availability of well-priced alternatives.

During such times, shoppers’ purchasing decisions are
increasingly influenced at the point of sale, rather than being
pre-ordained by existing brand loyalties, or brand advertising. In the
grocery sector, above the line expenditure as a proportion of total brand
support has dipped to its lowest levels for years and the battle ground is
now firmly in front of the fixture. Understanding Shoppers’ changing
behaviour, while key, can be fraught: for when Shoppers describe their
actions and motivations, what they say is often not born out by the
reality of their actions.

Shoppers like to think of themselves as increasingly 'canny' in these
uncertain times and understanding just what this entails is important. My
time is spent looking at the factors that influence at point of sale.
Whether utilising test stores or new technologies, we know that it is key
to observe and derive what is important at the fixture rather than relying
on their rationalisation post-purchase.

Is Shopping still a pastime?

As shopping alternates between being an essential chore to becoming an
important leisure activity for many and global living standards rise,
shopping has shifted from being merely a functional need to a source of
emotional satisfaction. This is as true in many emerging markets (for
example Latin America where nearly three quarters of shoppers still
describe buying personal goods as an important and enjoyable leisure
activity) as it is in top-end niche sectors in mature markets.

What we do need to understand is how this behaviour is playing out in
the current economic environment. Retailers and Brand owners who can
balance Shoppers' values with emotional fulfilment during recession are
most likely to survive. Focusing purely on cut-price promotions is not
enough, quite apart from the risk of destroying perceptions of brand value
built up over the years. In the current environment, shoppers are becoming
increasingly complex, still ready to reward themselves with occasional
purchases of luxury brands while also being increasingly prepared to seek
bargains, try new channels – and become ‘promotion
seekers’, whether by shopping in Discounters or by going on line. In
these rapidly changing times, the challenge remains the same – to
understand their complex reactions and thought processes right at the
point of sale.

October 16, 2009