Savvy consumers ‘squeeze embattled retailers’

Shoppers are more price-sensitive than a year ago and more inclined to spend time online researching the best deals, according to a new study. SAS found that nearly half (46 per cent) are more price-sensitive this year, with just 12 per cent less so.

The analytics firm commissioned 3GEM to survey a representative sample of 2,000 Christmas shoppers in the UK and Republic of Ireland during November, finding that 23 per cent will spend slightly more on gifts than the previous year, compared to 15 per cent who say it will be slightly less.

The research showed that price can no longer be relied upon as the most appealing factor when making a purchase. Almost a quarter (22 per cent) of customers saw discounts as the primary motivator of their purchase decisions, but 11 per cent prefer convenience to price.

Free delivery (19 per cent) and flash sales online (13 per cent) are other powerful motivators, but consumers can also be swayed by email promotions, stock shortages or overall customer experience.

SAS suggested that retailers are falling short in delivering effective personalised offers, as consumers do not seem particularly motivated by automated online recommendations, even where these are suited to their preferences. Only one in five said it would increase their likelihood to make a purchase, while 15 per cent even said such recommendations would make it less likely they would make a purchase.

Shoppers often research items online before buying them in-store, with Amazon and Google the most popular places to look for Christmas gifts. Together, they attract nearly half (45 per cent) of shoppers, compared to a third (32 per cent) preferring to look in-store for gift ideas, and only 12 per cent going direct to the retailer.

Despite fears over the death of the High Street, nearly half (47 per cent) of consumers typically make their final Christmas gift purchase in-store, compared to 32 per cent who prefer to buy from Amazon or Google. Physical stores are the preferred places for making a purchase of apparel (49 per cent), Christmas decorations (62 per cent), food and drink (73 per cent) and home furnishings (49 per cent).

Retailers also face high volumes of returned items, which can be costly to handle and add further complexity when it comes to predicting appropriate stock levels. One in five of the surveyed shoppers say they would at least occasionally buy items knowing they will return them, while eight per cent admit to being serial returners that would regularly purchase a range of items with the intention of returning a third or more of them.

Andrew Fowkes, head of the retail centre of excellence at SAS UK & Ireland, commented: “Against a backdrop of continuing economic uncertainty, business must go on as brands compete for the attention of today’s more discerning shoppers.

“As well as being more price conscious, they are more sophisticated in how they shop, researching the best deals and taking into account other factors such as free delivery, convenience and overall customer experience.”

Other findings from the report include:

• Black Friday and Cyber Monday enthusiasm has waned, with only 19 per cent Christmas shopping on these days compared to 29 per cent last year.
• High shipping costs are the most common reason for a customer to abandon a purchase (34 per cent), followed by long store queues (18 per cent) and bad reviews (18 per cent).
• Retailers with out-of-stock products risk losing a significant volume of sales – if it was not available online, more than half (55 per cent) would go to a different retailer.
• Shoppers would take advantage of technologies such as augmented reality and virtual reality devices (29 per cent), but there is relatively low interest in chatbots or digital shopping assistants (six per cent), suggesting artificial intelligence might be best applied enhancing the visual experience.

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