Wednesday, 3 August 2011

Retailers need a fresh approach

People just aren’t spending at major retail outlets like they used to. No doubt the GFC has had an impact, but maybe it’s more than that.

One retailer recently put it down to the fact that consumers are becoming confused by constant sales. His planned response was to establish a brand reputation of ‘everyday low prices’. I think this approach is much more effective advertising. When buying something from Ikea, Dan Murphy’s or Officeworks – you don’t wait for a sale. Because you know they’ll always give you the best price.

On the other hand, if I wanted to buy something from Kathmandu, I probably would wait. Their products seem to be frequently on sale for 50% of their full price, so in my mind – that’s all they’re worth. And ‘normal price’ starts to look like ‘pay 50% extra’.

So, yes, constant discounting can degrade the perceived value of a brand and its products, and consumers are waking up to it. However, the sale isn’t dead. It’s just evolving.

A growing number of online companies are emailing subscribers a heavily discounted product, or deal, every day. This new way of retailing is thriving. So much so that two Aussie brothers recently sold part of their online coupon business for $80 million dollars.

So are consumers becoming immune to constant sales, or is consumer behaviour simply changing? While it’s no doubt a challenging landscape for retailers, perhaps they should be looking beyond their conventional shopfronts to sell products.

If you’re looking for new ways to advertise to the modern consumer, leave us a note. We’ll be sure to chase you up via a number of different channels.

Andy McInerney

Writer

THE DM GROUP