Spending differently Deal hunting
“It’s no longer enough to save money, shoppers want to have fun with the savings experience as well.” Alexandra Smith, Managing Editor of Mintel Inspire
In mature markets, where disposable incomes have dropped during the economic downturn, many consumers have to live with limited budgets and adopt a thrifty attitude. They are looking for cheaper prices but not for cheaper quality. One the one hand, they are demanding the same items at more affordable prices; on the other hand, they are turning towards private sales, flash sales, or coupons and deals. Many are realizing that any kind of activity can be conducted in a practical, cost-efficient way.
Advertising Age reports that 87% of all U.S. shoppers use coupons. Another independent marketing research firm, A.C. Nielsen Co. reveals that 95% of all U.S. shoppers like coupons while 60% actively look for them.
Discounting dates back to the days of open-air bazaars, but the proliferation of e-commerce and smartphones now puts the neighborhood boutique in direct competition with the biggest discounts offered by online discounting platforms (Groupon, Living Social, Amazon Local Deals). Advertising Age reports that 87% of all U.S. shoppers use coupons. Another independent marketing research firm, A.C. Nielsen Co. reveals that 95% of all U.S. shoppers like coupons while 60% actively look for them. Only 20% of new customers lured in by daily deals ever return to make a full-price purchase, according to a study conducted by Rice University. In addition, a new wave of smart mobile apps as well as price comparison online services are helping shoppers to spend the least money possible and even to save some of it. In other cases, they go for low-cost options, which are no longer limited to airlines or generic shop brands but extend to bike-sharing programs, and even occasional celebrations like weddings and birthdays.
The rise of value retailers
In the same vein, consumers are looking for smart ways to buy the same products that they are used to buying, but with a much lower price tag. Discount retailers, such as Iceland, Aldi, Lidl or Dia have sawn through high streets and are reaping record high profits. Aldi is now officially becoming the UK’s fastest growing food retailer – having boosted its sales by over 35% since the start of the year. Also, the one-dollar/euro/pound-stores formats – British Poundland and 99p or Germany’s T€di – are growing in popularity. The concept has blossomed in food and consumables and is now expanding to apparel and beauty categories.
Aldi is now officially becoming the UK’s fastest growing food retailer – having boosted its sales by over 35% since the start of the year.
The economic slowdown has led many people, even amongst the middle and upper classes, to notice and try out the hard discounters as well as value retailers, price comparison websites, or group buying. They realized that on many products the discounters are equally as good as the main supermarkets, but with a much lower price tag.
New payment forms
Another shift is taking place in the way consumers are paying to get goods and services. More and more brands are getting creative with their marketing operations as they are increasingly accepting other means of payment other than the traditional credit cards and cash. Often limited in time, these initiatives are great solutions for consumers not to spend a dime. While they often explain those generous actions as a respectful consideration for the environment, a way to entertain people or the need to generate buzz, the actual ultimate goal is to encourage consumption, especially from those who can no longer afford what they want. Consumers can now use transportation services by providing chocolate bars and poems and can settle their bills with empty cans, Instagram shots or by doing the dishes.
New perceptions, new attitudes
Coupons and vouchers have become an integral part of consumers’ daily life and their attitudes to discounts and deals are changing. Whether they are frugal fashionistas or savvy savers, consumers no longer view bargain hunting as a necessary chore, but rather an enjoyable pastime. Value hunting has become a routine, and people will still go to dollar stores, clip coupons and pile up the private-label goods.
Although 30% of Groupon deals are never redeemed, it is about scoring the deal.
Obviously, consumers have always loved getting good deals or exclusive rewards, but rather than having to hide one’s haggling, securing the best deal is now accepted, if not admired by one’s fellows. Although 30% of Groupon deals are never redeemed, it is about scoring the deal. In fact, it is not so much about saving money than the thrill, the pursuit, the control, and the perceived smartness, and thus a source of status too. For some, pursuing discounts can even become an addiction. This strategy helps brands to maintain consumer loyalty in the face of shrinking household budgets and fierce competition from cheaper own-brand labels produced by supermarkets.
The ShopDrop app employs GPS to track users’ locations, helping them find discounts and promotions from stores they like during their shopping trips. Users select the signed-up stores they want to be updated about, which allows ShopDrop to send push notifications on their behalf. Currently more than 80 boutiques and high-end retailers in New York are signed up. “For highly dense areas, sending contextual messages is the best way to deliver relevant information to customers – when they are physically near the store,” ShopDrop co-founder Cory Bishop told GDR. The deals and sample sales are pinpointed on a map in the app.
United States, July 2014
Koken met aanbiedingen app
Dutch Koken met aanbiedingen app is enabling consumers to save money as it offers recipes made of ingredients that are on sale in major supermarkets that day. The app features ingredients lists, instructions and photo galleries to guide users through preparation of a wide range of dishes. Stores that are involved include Albert Heijn, Dirk, Lidl, C1000, Jumbo, Aldi and Plus, and recipes include at least one item that’s currently on sale in one of these stores. The service also includes a savings meter that shows shoppers exactly how much money they have saved thanks to the app.
Netherlands, July 2014
“Petits compromis” by ING Direct
A number of banks offer programs that convert a fraction of purchases into personal savings. Bank of America’s Keep the Change program and ING Direct’s Petits compromis round up every purchase to the next dollar and transfers the difference from the customers’ checking account to their savings accounts. In the same idea, the newly available Acorns service also helps people invest smarter as it introduces the risks and rewards of investing this extra amount of money in publicly traded securities. People are allowed to give up that guarantee and risk losing money when the market goes down, while the service holds the potential to give a much greater return when the market goes up.
United States, March 2014
In 2014, Fresh Market introduced Thursday Little Big Meals. The US retailer featured “Little Effort, Big Savings” meal promotions, offering shoppers all the ingredients to make a meal for a family of four for just $20. The meal was composed of organic salad, sauce and pasta, a large tub of fresh fruit salad, a choice of lean ground beef, ground turkey or white meat ground turkey, making this a healthier option for the family. A freshly-baked baguette was included, to choose with or without sesame seeds. As a bonus, families could pick from one of three spice blends to make garlic bread or jazz up their meat and the pasta sauce. With regular prices, consumers would have spent $13 more, allowing significant savings for the family.
United States, March 2014
The Wriggle app connects Londoners with last-minute money-off deals at food, drink and entertainment establishments. Select businesses offer empty seats or perishable food at a discounted rate for a limited period of time. Unlike Groupon, Wriggle claims to work with a “hand-picked” selection of independent businesses, emphasizing their quality — and takes a smaller-than-usual commission on each sale (9.5%).
United Kingdom, August 2014
In the UK, value supermarket chain Poundland prices everything in the store at £1 only. The same concept exists in the US with the ‘Dollar stores’ and in other countries in Europe with the ‘Euro stores’. Meanwhile, in 2014, Aldi was officially becoming the UK’s fastest growing food retailer – having boosted its sales by over 35% over the course of 2013.
United Kingdom, 2014
Business & Marketing guidelines
|Keep in mind that consumers are more open to trying new products and venues, but it will probably take a discount or clever promotion to get them through the door.|
|Credit to clever consumers: play on the social kudos that Millennials are increasingly loooking to save money. Provide them with interesting and innovative opportunities to feel like smart, savvy shoppers across all budgets and categories, and, where necessary, offer opportunities for discretion when saving.|
|Consumers are certainly expecting reduced prices since the economic downturn, but would rather take that discounting a step further with promotions that engage and entertain.|
|Allow customers to choose the number and type of deals they receive, and couple this with location-based offers in order to reduce the potential for savings burnout.|
- A.C. Nielson Co. reveals that 95% of all U.S. shoppers like coupons while 60% actively look for it. A recent article in the Wall Street Journal entitled, “In a Pinch, Snip” states that coupon use rises, as the economy in any given area slides. 54% of shoppers surveyed said they had already stepped up use of coupons, and even more are expected to do so.
- Research for the Private Label Manufacturers Association says that among female shoppers, 53% clip coupons and look for deals, and 87% buy store-brand products at least occasionally.
- Whether they are frugal fashionistas or savvy savers, consumers no longer view bargain hunting as a necessary chore, but rather an enjoyable pastime. Value-hunting has become a routine.
- Consumers are looking for smart ways to buy the same products that they are used to buying but with a much lower price tag, so they turn to hard-discounters, value retailers and one-dollar store formats.
Experts that we recommend
Innovation & Leadership Strategist, & co-author of book L’innovation jugaad, redevenons ingénieux (Diateino, 2013)
Consumption and retail researcher & author of book La nouvelle révolution commerciale (Odile Jacob, 2011)
Founder of the Ellen MacArthur Foundation, circular economy specialist & author of book Les pieds sur terre (Glénat, 2011)
Belgian architect & creator of the Cradle to Cradle concept