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