Retailers told to focus on in-store experience as customers suffer “sales fatigue”

Retail customers are becoming wary of constant sales and will not automatically buy a product just because businesses are offering bargains, a new study reveals, calling the new trend a form of “sales fatigue”.

But one industry expert says although consumers are no longer being triggered by discounts, over 50% still want a good deal and will prefer to buy from businesses that offer an “experience”, even if they have to pay full price.

The AMP Capital Shopping Centres survey reveals nearly 50% of Australian shoppers say sales have “lost their appeal”, and no longer cause them to buy. AMPCSC head of marketing Stuart Langeveldt says despite growing consumer confidence, consumers believe the constant sales are often designed to deceive.

“Nearly half the respondents we spoke to say they are over sales, they’re over the fact retailers are putting things on sale too much. If you think back to pre-GFC, sales were only around once or twice a year.”

“These same respondents often believe that things aren’t on sale, and many businesses are just using the term as a method to get some quick turnover.”

However, the survey also reveals more customers are willing to keep shopping. About 12% say they will spend more on eating out, compared to 6% in 2009, while 10% say they will spend more on takeaway meals, compared to 7% in 2009.

Spending on big-ticket items is also set to increase, with 44% saying they will spend more on local holidays, while 37% say they will be spending more on technology, such as mobile handsets or computers.

Langeveldt says the figures clearly demonstrate customers are willing to pay for big ticket items, but they won’t be attracted by a sale. Instead, retailers need to start offering them more than just a product.

“The retail landscape has changed. People want to find a bargain, or a deal, but they also want good quality. This means that retailers need to offer more than a sale, they need to offer an experience. You need a multi-media approach.”

“The message is that more than ever, customers are in control. They have real control over stores. They are armed with product stats, they are armed with information, they are armed with price comparisons from online. They want to see what kind of experience you offer.”

Langeveldt says savvy retail businesses need to be working across channels including an internet page, Facebook, Twitter, LinkedIn and other websites in order to create a cohesive multimedia approach.

He says businesses should avoid discounting and instead focus on what they can offer customers online. He points to Abercrombie and Fitch, which in America has thousands of fans on its Facebook page and offers new designs, videos on models and interact with customers about things they want to see in stores.

“This is the interactive experience we need in retailing, and that’s what people are looking for. They will be willing to pay more if they are getting some form of experience and some form of customer interaction, not just a “for sale” sign. You need to offer them something else with the product, because they have all the information and will go somewhere else if you don’t.”

In the end, Langeveldt says local retailers won’t have a choice. International arrivals such as Zara and Gap are changing the market, and are pushing customers towards more of a value-driven purchase as they refuse to engage in discounting.

Last month Gap told SmartCompany it would refuse to enter a discounting war, instead pinning success on the fact customers would be more willing to pay for a quality brand name. Langeveldt says this is spot on.

“I don’t think the international expansion here is going to be particularly overwhelming simply because our market isn’t that big, but there are specific retailers like Gap and Zara coming that will come and test this market, and that will force retailers to change.”

He points to companies like British supermarket chain Waitrose, which offers customers the opportunity to vote for an important cause in their community, and then offers that particular movement some funding. This type of interaction should become the norm among retailers, he argues.

“Over half of our respondents want more than a product, they want interaction. And they have the power, because they are becoming savvy with our overseas businesses are using the internet, ordering online, interaction on Facebook, Twitter and so on. They want more and won’t settle for a simple “for sale” sign.”

“Because although spending is increasing, people are still cautious about the economy. They want to take baby steps back into spending and this is a good first step.”