Tips for retailers

Closing the sale when trading is tough

June/ July 2009

Worldwide there are certain shopping trends that are common to all consumers — and even though the research was mainly done in FMCG stores, there are many shopper-characteristics that will also apply to sport, outdoor and footwear and clothing lifestyle stores. Arnaud Frade, shopper and retail regional director for TNS Research Surveys in Africa, Asia Pacific, Latin America and the Middle East recently told a Cape Town audience about the shopper trends they identified through their research. They found that consumers are now looking for:

» Good value: this does not mean that they are looking for the cheapest price, but they want the best value for money, for example from brands that can be trusted. They are concerned about safety issues and are becoming more aware of where products had been made — for example, Made in South Africa could become a bigger selling point. With the growing middle class in countries like China, a bigger demand has been created internally and manufacturing and export prices from the East are therefore going to increase and selling on price alone could become more difficult.
» Consumers want simplicity and clearly defined niche markets — they don’t want confusion. How products are presented in the store and how consumer sections are labelled could make the difference between a sale, or not. A retailer can, in fact, tell consumers what they need to buy through signage and by creating theme or brand areas.

For example: a Pretoria angling store created dedicated sections for bass, carp, fly etc. where the consumer will be able to find everything in a clearly defined area, instead of having to look for rods in one area, hooks in another, line further away, etc.

The same could apply to a sport store — create a cricket area where a consumer will be reminded that he might also needs socks, a cap, grips, sunblock, a water bottle, compression baselayer etc. when buying a bat.

» Customers can be encouraged to buy more by grouping seemingly unrelated products together. Frade uses the example of a convenience store that grouped nappies and beer together as a “special” — and despite the fact that both brands were amongst the most expensive, they sold very well. The store owner obviously knew his customer well and that the young fathers need beer as much as their babies need nappies. All it needs is “thinking outside the bow”.
» Nowadays, time is short and shoppers are often in a hurry — short trips are now becoming critical. Therefore, place the popular items that people buy in a hurry near the entrance, as the longer a hurried shopper stays in a store, the more frustrated he becomes, and the less likely he is to buy, says Frade. Forget about the old belief that you should hide the most popular items at the back so that the customer is forced to go through the store and hopefully buy other items on impulse.
» Wider aisles promote sales — where merchandise encroach on aisles, consumer frustration increase and they buy less.
» Today the focus in retailing is on the specific items that drives revenue, says Frade.

(This does not mean that all stores must offer the same brands or items — it depends on the profile of your typical customer. For example, customers of a specialist football store will buy other brands than the same brands stocked by general sport stores or chains).

» Brand building should happen before the shopper enters the store, so that the consumer enters the store with a clear disposition of what they want. The retailer’s only concern in the store should be to sell, sell, sell.
» In future, technology — mobile, internet and RFID — will become more important:

» In future a shopper chip in a cell phone could send an SMS to alert the customer to specials or remind him or her to buy their favourite shopping items — and then, upon exiting, an RFID scanner recognises the items in the shopper’s basket, and simply deducts the amount owed from the cell phone, via the shopper chip. This technology is already used in a store in Germany and one in the US, says Frade.

» Dynamic pricing — where prices change during slower and higher volume shopping — has already been introduced in some European stores. Although there is some consumer resistance, daily price changes (made possible with technology) is a more sophisticated form of the annual sale, says Frade. It is simply a way of attracting customers to the store during quiet periods in a day, instead of season.

» The use of RFID, which can ensure seamless stocktaking and improve store security, is equally controversial. But, says Frade: it’s here to stay and people will eventully get used to it.

» Some future trends are already used in South Africa — for example, giving customers the opportunity to recommend product. For example, a Cape Town wine store has a taste table where customers can rank new wines. The same could, for example, be done with selected samples of new sports or outdoor goods: let customers test them in-store and give their opinion before you decide to stock a new brand.

During a recession the market does not disappear, but consumers re-evaluate how they shop:

» They think more about purchases and look for better value. They are prepared to spend a little extra on a better product from a brand they trust;
» Small luxuries replace big splurges;
» When money is tight, people often explore new routes for purchasing, for example, joining resources to form buying clubs to get bulk discounts.
» During bad times there is usually a stronger feeling of nationalism and Made in South Africa could influence purchases.
» Many brands use a recession to refresh and strengthen their business models… some of today’s top brands were launched during a recession — but discounting will devalue a brand and drag it down, says Frade.

For more information about TNS Research on shopper and retail trends visit www.tnsresearchsurveys.co.za or contact Peter Wilson on Tel: 021 657 9500. Email: peter.wilson@tns-global.co.za.