At a time when retailers struggle to maintain business health, under siege from discounters, online giants and rising costs, 52% of the weekly or monthly promotions they offer go to customers who would happily have paid full price – a stunning cause of lost margins that retailers can ill afford. A survey commissioned by Revionics, Austin, Texas, and conducted by Forrester Consulting, Cambridge, Mass., explored shoppers’ behaviors and experiences with retail pricing and promotions.
The survey, which questioned consumers in the United States, United Kingdom, France, Germany and Brazil, also debunks retailers’ hope of recouping margins by raising prices on limited-stock items. When asked how they would react if an item they wanted was available at a higher-than-expected price, nearly 60% of respondents said they would wait, not purchase the item at all or purchase it from a different retailer.
For retailers, using science-based pricing and promotions to meet customers’ expectations and provide relevant offers when and where they matter is key to shopper satisfaction and long-term business health. As the study notes, “These incessant and poorly targeted promotions create a climate of perpetual abundance and undermine the customers’ sense of urgency to buy. Instead of wasting money and resources on indiscriminate campaigns, retailers should focus on personalized and timely promotions. Retailers should use customer insights and data science to design the promotions that are most appropriate for different groups of customers in context.”
“This confirms what we found in the earlier study—that today’s shoppers worldwide are incredibly savvy and discerning,” says Cheryl Sullivan, chief marketing and strategy officer for Revionics. “Retailers who want to effectively reach their customers with meaningful prices and promotions must embrace a science-based approach now if they want to remain relevant and competitive.”