Scarred by the Great Recession and embracing frugality, the new consumer is different from the one retailers knew and loved way back in, oh, 2006.
The AlixPartners Consumer Sentiment Index study, queried about 7,700 U.S. consumers on what they buy and where they buy it. Consumers were asked about 63 factors in five major attributes – Access, Experience, Price, Product and Service – that influence their purchasing decisions at 135 retailers.
Its conclusions provide plenty of food for thought for retailers, little of it appetizing. The study has not been made public, but AlixPartners provided BNET with some of the more important findings. Among them:
Despite technical signs of recovery, consumers are unconvinced that the weak economy will recover its vitality soon.
Consumers remain anxious but less so than they were at this time last year.
Unemployment is not the only factor holding back retail spending. Across the demographic spectrum, consumers are restraining their spending.
Little of this would count as surprising among retailers, or even around the kitchen table. The more interesting parts of the study have to do with subtler trends.
A new shopper emerges. Consumers have become sharper and better educated about the products they buy and where those are available. Previously, consumers ranked time as their most precious commodity, but now they are willing to drive the extra mile to get a product at a better price.
Shoppers search for “good enough.” Just a few years ago, shoppers wanted to purchase the best product in a category. Now they are more likely to accept good-enough products. Consumers won’t rebound quickly from trading down because many have been satisfied with their bargains.
Consumers continue their flight to value. In every retail sector, and at every price tier, value is far more important than brand loyalty in purchase behavior. A decade ago, service ranked before price in consumer purchasing decisions. Today, service is the least important attribute in every one of the 16 categories in the study. The danger retailers face is that, if they bungle the price/product balance, their customers may look for a better value elsewhere and never come back.
Winners and losers pop up in every retail category. Bargain prices aren’t a guarantee of success and a luxury orientation need not be the kiss of death. Luxury retailers can succeed but they must strike a balance by offering a unique experience – including product, atmosphere, and service – that can offset higher prices in the consumer value judgment.
Consumers are pickier: Just 15 of the 135 stores in the study met or exceeded customer expectations. According to AlixPartners, the shares of those 15 stores rose twice as fast as the Dow.
These were the study’s general conclusions; more on some of the specifics will follow in an upcoming post.
Courtesy of David Weir and BNET.
Photo: Flickr user David Blackwell
