Even as the economy improves, the majority of shoppers say they’re still committed to coupons and deals. So how can brands gain an edge with this price-conscious crowd? A new study says they should consider offering fewer coupons and deals.
Wait – say again?
The seemingly against-the-grain advice comes courtesy of Deloitte’s latest annual American Pantry Study, which surveys shoppers about their spending and saving habits.
“After years of caution and penny-pinching,” the report reads, “this year’s survey is particularly important and exciting because it offers early insights into how today’s consumers are responding to the U.S. economy’s belated but increasingly strong recovery.”
Most say they’re responding the same way they responded to the downturn in the economy – by continuing to seek out sales and stretch their dollars.
But others are apparently loosening up their purse strings. And brands that have been offering coupons and cutting prices to keep shoppers interested, smell an opportunity.
“Companies should step back and consider challenging the status quo, rather than immediately resorting to discounts and promotions,” study co-author Rich Nanda said in a statement. “Although price remains the single biggest factor influencing at-the-shelf purchases, many other aspects can also catch shoppers’ attention.”
Aspects such as quality. Shoppers who had increasingly turned to store brands and lesser-quality products to save money, for example, are starting to switch back to more expensive brand names. And others plan to, as the economy improves. “Someday, I will get back on a good financial footing,” one survey respondent said. “When that happens, I will abandon low quality food.”
In addition, a quarter of shoppers surveyed said they would be willing to pay 10% or more, for a product that’s new or innovative. A similar percentage would pay more for a healthier version of a product, or one that’s more convenient. And a third say they’d pay more for a “craft version” of a favorite food or drink.
“Today’s consumers are willing to pay more for products with the right attributes,” the study concludes. “It might not be unrealistic to expect that this willingness to pay a premium would hold steady or even increase as the economy improves.”
So brands might do well to catch shoppers’ attention, the study suggests, by easing up on all the coupons and sales, and using the quality of their products as a selling point instead.
But that strategy is not going to work on everyone. “The economy is on the upswing, but that won’t change my frugal nature,” one survey respondent vowed. “Whatever is on sale or I have a coupon for is what I’ll buy. There are just a tiny handful of items that I will purchase at full price,” another added. “Grocery shopping is a game. I keep my pantry stocked with items on sale,” a third shopper said.
In fact, the vast majority of those surveyed said they don’t plan to budge from the thrifty habits they picked up in recent years. But the study’s authors wonder if that’s really true. “Are consumers right?” they ask. “Or will they quickly revert to their old free-spending habits once the economy gets rolling?”
Brands that bet wrong, may end up turning off shoppers who are determined to look for deals. But those that get it right, may attract enough free spenders that they don’t have to worry about appealing to the deal seekers.
So if you notice fewer coupons and sales on your favorite products, you know which way those brands are betting. How you respond, will help determine whether that bet pays off – or backfires.
Image source: Deliotte
They’ll be betting on losing sales and I’d stay away from their stock. The economy isn’t improving and with the instability from China to Greece increasing, things are only going to lead to more jitters. I can already tell restaurants are impacted as so many restaurants are again offering 2 for 1 coupons via email. This is always a sign to me that there are troubles.