Customers might think they don’t want to spend, but they may just need some gentle persuasion. Rebecca Thomson finds out how to get people shopping when they think they don’t want to.

By any measure, it’s a difficult time of year for retailers. Administrations are hitting the headlines, 2012 is expected to be grim as consumers tighten their belts and pay off their Christmas bills. And yet for retailers, there is no let up. They need to continue – often against all odds – to persuade shoppers to spend. And moreover, persuade them to spend in their stores, not a competitor’s.

Andrew Mann

Andrew Mann

As Sainsbury’s director of customer insight and loyalty Andrew Mann says: “Customers are always finding it difficult and they say it’s getting harder and harder.”

So how can retailers do it? Encouraging shoppers to open their purses is the retail industry’s bread and butter, but at the moment it is a massive challenge. Consumer confidence in December fell to -33, according to the GfK NOP index – the third lowest score in the 37 years the index has been running, and 11 points lower than in December 2010.

“The less money you have the more careful you are in spending it,” says Philip Rooke, chief executive of clothing etailer Spreadshirt. “So consumers have got to understand more about what they’re buying, and the more information they can get, the better. It’s a much more considered purchase.”

The new normal

2012 will be an unusual year, and one with a unique set of challenges. Not only are retailers dealing with a cyclical downturn, but structural shifts in the industry mean the way people shop is changing. Mobile phones make it easier for customers to research in-store, and shoppers’ attitudes are changing as well – with more information on products easily available and household budgets tight, consumers want good value and will shop around to get it.

None of this makes retailers’ jobs any easier. “Nearly every major chain would rather be in another place – the top retailers are all suffering in their home markets,” says Richard Beatty, chief executive of consultancy TCC, which works with retailers including Tesco.

Catherine Shuttleworth, chief executive of Savvy Marketing, which works with retailers including Asda and Debenhams, says it’s not all about price, even in today’s unforgiving climate. Customers are not just looking for low product prices, but are prepared to pay more for things that will last. Mann agrees: “Customers are trying to balance their idea of quality versus price on an ongoing basis. Better value can play a role in boosting confidence.”

Consequently retailers need to give customers as much information about products as possible to help them make decisions and decipher what represents the best value. Keeping the shopper informed provides a much-needed confidence boost, which is vital because people are less prepared to gamble on products than they used to be.

Making online returns information clear and obvious is also crucial, reassuring shoppers they can send things back if necessary. “If a retailer is running a cut-price Sale it means a customer will take more risk with what they’re buying, but increasingly even then people want information. They are not prepared to take gambles,” says Rooke. Increased use of social media can help in January, he adds, as customers flock online to research.

The informed shopper

Product information will help shift stock, and so will customer information. Making better use of data so customers are targeted with relevant marketing is also necessary for retailers wanting to increase sales. “We are in an information selling game as much as a retailing game,” says Allyson Stewart-Allen, managing director of consultancy International Marketing Partners, which has worked with Burberry. “I’m not sure everyone has figured that out yet.”

But perfect information can only do so much – what matters in difficult times is having a business that customers want to spend with, grabs attention and stands out in a crowded market.

Whether it’s Abercrombie & Fitch and Hollister’s male models stripped to the waist and standing outside its stores, Apple’s intuitive technology and impressive products, or Waitrose’s reputation for quality food, a variety of factors all help retailers to keep doing well.

Apple’s staff and products help it stand out in a difficult electricals market

Apple’s staff and products help it stand out in a difficult electricals market

Customers need a reason to choose a store, and will quickly defect to a nearby competitor if they think they’re not getting the best deal or if a particular experience leaves them cold. “People are making fewer discretionary purchases and retailers need to create some excitement,” says Shuttleworth. “You’ve got to create a reason to visit a store.” Morrisons, for instance, drew people into stores in January using a deal to give people a free basket of shopping worth £10. Once people are prompted to enter the store, the chances are they’ll spend their budget there.

Clarity of brand

It’s not just the clever gimmicks that will help fill the aisles with people. Retailers need to ensure they have a point of difference and clarity on what they stand for. A lack of clarity is a problem that particularly affects the middle market, although some do manage to crack it.

John Lewis has developed a reputation for service and a solid, middle class brand that shoppers trust. Debenhams, meanwhile, has netted designers such as Henry Holland and Jasper Conran to give customers access to designers they may not otherwise have.

Debenhams differentiates itself by giving customers access to designer fashion they wouldn’t normally have

Debenhams differentiates itself by giving customers access to designer fashion they wouldn’t normally have

But not all middle market retailers have managed to do something similar. “If you’re in the middle market you need to be absolutely crystal clear on what you are, and retailers in that part of the market often lack that clarity,” says Stewart-Allen. “Increasingly they will be forced to clarify what they are and who they’re serving.”

Charlotte Amos, director of consultancy Haygarth, which works with retailers including Signet and Majestic Wine, agrees it is the retailers with a very clear proposition that will do well. “You need to understand what makes your shoppers different and understand their purchase triggers.”

B and Q’s campaign taps into customers’ emotional links to their homes

B and Q’s campaign taps into customers’ emotional links to their homes

She says too many retailers think difficult economic times mean shoppers only care about price. There are other, more emotional triggers that can be used to spur people into activity – B&Q’s most recent advertising campaign, for instance, doesn’t just focus on low prices but on the memories created in people’s homes that its products can help to build.

Not enough retailers are thinking about how their businesses impact emotionally on people’s lives, Amos says. “A lot of the activity so far has been quite price-focused. There’s an opportunity to balance that out with more emotive pulls.” At Sainsbury’s, Mann says, the ‘Live well for less’ campaign helps it to connect emotionally with customers, who believe they will get good value from the grocer.

Watch and learn

Staying up to date with how shopping trends are changing requires effort – the usual focus groups and other research methods will help. But so will simply watching how people shop in your stores and speaking to people. “You need to understand the differences in shopper behaviour. It’s about fitting in with how people are living their lives,” says Shuttleworth.

It’s also about staying aware of changing trends and retaining a sense of how the high street works, says Amos.

“You need a bit of a feel for the high street – what’s happening, what’s behind changing purchasing patterns, an understanding of the different pulls on the shopper,” she says. By staying attuned in to the various different sources of information on how and why shoppers are keeping their wallets closed, retailers should be able to create a business today’s shopper wants to interact with. “It’s not rocket science – if you get out and talk to people they will tell you want they want,” says Stewart. Mann says that Sainsbury’s marketing is born of the company’s values, but that listening to customers is also imperative. “Retailers always need to listen to customers and help them. That’s when they’ll come back. We are always trying to give them a reason to return.”

Customers’ needs will change in each category, and the approach retailers should take also depends on the sector they operate in. The grocers, for instance, must focus more on price than others. But it’s still not enough on its own.

The economy is doing nobody any favours, and the downbeat headlines and gloomy predictions aren’t helping to foster an atmosphere conducive to spending. But don’t despair – retailers interact with shoppers on a daily basis, and play a crucial role in their perception of the economy and the general spending environment.

A carefully mixed cocktail of loyalty rewards, information, good quality products, good service and a clear business vision will draw customers in regardless of the difficult climate.

If retailers manage to help shoppers forget how gloomy things are, they’ll be rewarded with stronger sales and enthusiastic shoppers. Failure to do so, and those purses will remain shut.

Against the odds - How to keep shoppers spending

  • Boost confidence by reassuring shoppers with clear information about products and your returns policy Clear product information will help shoppers make well-informed decisions about what they buy, which makes them more likely to part with money. It also means shoppers’ penchant for value – well researched, good quality and well priced products is catered for
  • Give people a reason to come into your store Competitions, rewards, entertainment and events will all help drive footfall. Retailers need to stand out in a crowded market and clever use of deals or events can help do that
  • Understand the emotional triggers on customers, as well as the rational triggers such as low prices Retailers need to show shoppers clearly how buying their products can enrich quality time with their family, improve their style, or help them start a new hobby – whatever you’re selling, it’s not all about price
  • Make sure your business is differentiated from competitors Whether it’s a reputation for service, for trend-setting, for low prices or for innovative products, your business needs to stand for something if it is going to attract the hordes
  • Talk to customers, and listen to what they say It’s the only way you have a chance of staying up to date with how they are evolving
  • Stay up to date with industry trends Follow how shopping is changing, and the role the high street plays in shoppers’ lives. It all helps you evolve as shoppers do
  • Once the shopper is in your store, your still have to convince them to buy This often comes down to service – if someone is acknowledged they are more likely to be spurred into making a purchase. If consumers are ignored, the marketing and advertising effort and funds that went into getting them there could be wasted