Retailers must communicate effectively with consumersDate posted: 5/10/14 05:45:00 AM
Slow sales from the holiday season hurt many retail stores and small business owners around the nation. It seems the problem is effectively communicating with consumers, according to new shopper research from Parago a global incentives and engagement company.
But just how important is the holiday season to retailers? According to the National Retail Federation, the holiday season can account for 20 to 40 percent of annual sales. In 2012, holiday sales made up 19.3 percent of the industries total retail sales, another low total for holiday sales. So figuring out the line of communication can mean the difference between a successful business and one about to shut its doors.
Rodney Mason, CMO of Parago, said retailers are navigating uncharted waters.
"Retailers have a lot to contend with in this new era of shopping: highly competitive prices from e-tailers like Amazon, rising smartphone adoption, the showrooming boom and incredibly price-sensitive consumers," Mason said. "For retailers to thrive, they need to disrupt the path to purchase with a dynamic, real-time pricing model. Not just online, but in brick and mortar, too.
Fast purchases for many consumers
The Parago survey shows that American shoppers are highly sensitive to price - 65 percent of shoppers reported being more sensitive to price this year than the last - but they are also making quicker decisions on purchases than in the past. This means there is more pressure than ever on retailers to entice customers with great deals in order to close sales.
One of the reasons behind faster consumer decisions is the use of online, mobile and social channels. Even compared to just a few years ago, it's much easier now than it was to find the best deals and make purchases quickly. The survey found that four out of five 18- to 48-year olds own smartphones and that two out of five people shop on their tablets. The smartphone statistic is one of which small business owners should especially take note because Parago reported that nearly 50 percent of consumers use their smartphones to compare prices.
"The ability for consumers to access near perfect information means that traditional assets like brand name, loyalty, price and number of other proxies consumers use to establish quality, are becoming less important," Itamar Simonson, Stanford professor and co-author of "Absolute Value" told Street Fight Magazine. "Certain functions of marketing will continue, but overall, in the long run, we will be looking at decreased expenditures on marketing."
Retail numbers to chew on
Most retailers would like to target people with disposable income. The survey from Parago showed that 99 percent of people with $50,000 or more of annual income use their computer to shop. Meanwhile, 88 percent of consumers surf the Web looking for the best deals, prices and rebates before shopping.
"Our research shows that dynamic-price rebates are one way to respond to consumers' demand for lowest price and protecting margins, unlike across-the-board online price matching," Mason said.
A new shopping app making noise
Founded in 2013, shopping application Ziploop is rounding into form. The application hopes to get rid of all paper transactions by storing receipts, cards, store certificates and coupons all in the app for easy sorting.
"With Ziploop, we've branched out from the 'old world' model of shopping," Peter Jackson, Ziploop CEO and founder, told Finextra. "We see a massive opportunity here with retailers shifting from paper to digital and emailed receipts and rewards. We use our mobile devices for everything, so why shouldn't shopping be a part of that?"
Ziploop president Sandra Breber said more than 80 percent of the annual $2.2 trillion consumer spending is attributed to women.
Ziploop is one of the few apps built for women by a woman," Breber said. "We not only shop for ourselves, but for our home, kids, husbands, and everyone in between. We purchase everything from clothing to furniture and those transactions create a lot of paperwork."
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