Articles

More of The Same Won’t Cut It.

In the last 2 years of the 12-year bull-run that retailers have enjoyed in this country, price-off or discounting was beginning to lose its luster as a tool which generated big impact purchase spikes. Many retailers found that – despite offering deeper discounts with even noisier promotion – while sales spikes remained, promotional sales weren’t climbing to anywhere near their previous levels.

This forced many into an ongoing series of rolling discount periods well before the slow-down in market growth that began in 2007.

Fast-forward into 2009 and the survival mode many retail businesses have found themselves in has created a competitive environment with a seasonal colour palette consisting of only one colour – red!

Yet while discounting and red ink may be the uniform of choice among many increasingly desperate stores, it is not the preference of shoppers abundantly aware that they “do not need more stuff – even if it is cheap”. Let’s get one thing straight. Shoppers smell fear. When retailers yell “Cheap. Cheap. Cheap”, shoppers hear no confidence in a value proposition and therefore no floor price. The price is effectively whatever they are prepared to pay for like for like goods which they often already have enough of.

Over-expansion of the distribution of like for like goods, lack of retail differentiation and an air of panic from retailers have combined with global economic turmoil and media propaganda to create the perfect storm.

The fundamental truth is that shoppers are still shopping. In fact, in most categories volumes are up but value is only steady at best as the effects of discounting create the deflationary pressure. Moreover shoppers will always spend what they perceive they have to spend – despite sentiment. But the over-whelming reality is that growth only comes from one thing.

Desire.

Great retail and retailers have the ability to create desire in the hearts and minds of customers that compels them to buy and – even before the present market scenario – price-off alone was no longer the shopping Viagra it used to be.

Right now we are staring at a sea of new season’s red-ness. Every retailer trying to pull the same mono-syllabic lever. So after we’ve satiated every cheap price seeking shopper segment imaginable and killed normal demand by over-stuffing the warehousing facilities of the average household, what will stimulate sales that are profitable?

Retail desperately needs to rediscover the ability to create desire in the hearts and minds of shoppers – and fast.

Because – come the end of January – more of the same won’t cut it.