by Ben Allott
As I walk down the high street today things look very different to 20 years ago, or even just two. But as the economy continues to struggle, with the outlook for expected low levels of growth, retailers are being hit hard. Everywhere you look retail outlets are closing down as the high street starts to resemble a ghost town.
Only recently a report showed that more than 30 UK chain stores closed a day in August and July – this is up from 20 a day in the first six months of 2012 (Local Data Company (LDC) for PricewaterhouseCoopers (PwC). However, a small light can be seen at the end of the tunnel as online sales increase and retailers turn to the internet to help boost the bottom line and help combat the consumer spending slump.
The question is, can more be done to help retailers and how many are actually taking into account the distinct shift from the high street to the online world when looking at buyer behaviour? Who exactly is an avid store goer, do they also shop online and does this change depending on age? If so are retailers and marketers making the most of multichannel marketing to help retain and gain new customers? Sadly I fear not, and with the economic outlook as it is and consumer spending growth at a mere 0.7%, retailers and marketers clearly need to do more to combine consumer insight and effective multichannel marketing to help counteract this seemingly never ending ‘credit crunch’ and continue to build strong reputable brands that can make money.
If retailers want to continue to trade via retail outlets and online they need to bring the two worlds together otherwise, as we have seen, the internet can have a direct impact on the retailer’s sales per square meter return and when this drops it becomes less cost effective to run an outlet at a sustainable level of profit, which ultimately can lead to the closure of underperforming stores.
Consumers are adopting increasingly complex shopping behaviours to get what they want and many high street stores are being undercut by cheaper online rivals. A recent study, undertaken by Callcredit, looked into the link between buyer behaviour and age and showed a number of significant findings which reiterated the importance of understanding buyer behaviour and the need for multichannel marketing. The results showed that the older generation are embracing online shopping over younger consumers when compared to shopping in store. They also scored highest when purchasing holidays and airline tickets online. All areas where it could be expected younger consumers to score higher.
As well as scoring in the top three for online and shopping at a supermarket 16% of 51 to 60 year olds and 15% of 45 to 50 year olds also shop via mail order. Our results highlight how consumers are combining different channels to purchase goods and that different age groups have their own buying pattern. (See fig.1. Channel compared by age)
Fig.1. Channel compared by age
With consumer spending at an all time low and the government only forecasting growth of around 1.3 per cent in 2013, the need to understand your customer is ever more important. Effective multichannel marketing provides an opportunity to target the right consumers, at the right time, through the right channel, with the right message, which is vital when building the right acquisition strategy.
Changes in society and technology are having a big impact on buyer behaviour and for retailers embracing technology and big data assets is a must if they want to acquire new customers, reach reactivate lapsers or retain and grow current relationships and compete against their competitors.
Consumers are even more empowered than ever and in isolation traditional marketing methods are just not effective enough in today’s market. Merchandising, direct mail, TV ads and promotions are not nearly as effective as they were 10 or 20 years ago as an increasing amount of businesses now focus on online marketing. This doesn’t mean the offline marketing strategies should be forgotten, but instead integrated with online and other forms such as mobile marketing, creating a multichannel marketing strategy, which together will generate inbound marketing traffic that results in new leads, greater brand recognition and/or higher sales.
If retailers want to continue to survive the economic storm they need to be savvier with their marketing and start connecting the dots between the online and offline worlds to help drive consumers back to the high-street and improve the bottom line.
Ben Allott is business development manager at Callcredit Information Group.