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THE NEW VALUE MINDSET: TARGETING VALUE SHOPPERS DURING THE SHOPPING RECESSION by Liz Crawford, VP, Consumer Strategist, CPG and Retail Brands
and Donna Daniels, PhD VP, Consumer Strategist, Retail/Fashion and African American Markets
and Tim Henderson, Sr. Director, Consumer Strategist, Matures and Retail Everyone loves a bargain — and never more than in 2008. Credit rising gas prices and a sputtering economy for most of the shift toward value. Shoppers across incomes are resorting to old ways and finding new ones to save dollars and make sense of an anxiety-inducing economy. Some delve deep into scrimping and splurging, others are forging a new friendship with old-time coupons and still others have put the brakes on certain purchases altogether. No one can say for certain how long this shopping recession will last. But retailers can bank on one thing: Consumers at every level now demand a bigger bang for their buck. THE FOUR FACES OF THE VALUE SHOPPER Value is front and center for every purchase. But how consumers interpret value, seek it out and acquire it does differ. The four value shoppers we identify below can be categorized into two groups: those who are just getting their value footing (Socially Frugal Shoppers and Swing Shoppers) and those who are motivated by value, regardless of the overall economy’s ups and downs (Bargain Shoppers and Cheapskates). All four are viable targets during this shopping recession. Socially Frugal Shoppers can afford to ride out the recession unscathed, but now it’s cool to be thrifty. From the White House to the neighbor’s foreclosed house, the economy is on everyone’s lips, and this consumer doesn’t cherish being held up as evidence of conspicuous consumption. Less is the new more.
How to reach them: Seed brands with influencers and WOMBATs.
Relevant macrotrend: Beehiving SM
Values: belonging, identity, pride, security, loyalty
Demographic hotspots: Top income quintile
Where they’re shopping: Trading down to outlet malls, Target, Macy’s
Find them online at: Amazon.com, Zappos.com Swing Shoppers are still on the hunt for the good life, but for less. Scrimping and splurging and buying high and low have always been part of their DNA, but more so now. Shopping for brand names at discounters and off-price chains is their new favorite sport. They swung upscale when the economy was hot; now they’re trading down in the cold economy.
How to reach them: The message is “Same quality merchandise, but at a better price!”
Relevant macrotrend: Get Real SM
Values: practicality, reality, responsibility, legacy, self-sufficiency
Demographic hotspots: Boomers watching retirement dollars dwindle, Gen Xers trying to build lifestyles on a budget
Where they’re shopping: Trading down to T.J. Maxx, Target, Costco
Find them online at: Overstock.com, PriceGrabber.com Bargain Shoppers have long made thrift a lifestyle centerpiece. They’re not tightwads, but lifestages — or simply Mom, the family’s chief financial officer — often dictate taking a thrifty approach to all budget needs. These savvy, price-sensitive shoppers don’t tire of shopping with coupons, haggling, joiningloyalty programs or partaking in comparison shopping. They know the shelf price is just the starting point and that price control is within their reach.
How to reach them: Appeal to their sense of being a savvy buyer. The message: “Never pay more than you have to.”
Relevant macrotrend: Dollars and Sense SM
Values: savvy, control, reality, practicality, reward, success
Demographic hotspots: Budget-bound moms, families, low-middle-income and lower-income consumers Where they’re shopping: Wal-Mart, Aldi, Old Navy
Find them online at: TheGroceryGame.com, Shortcuts.com Cheapskates will drive miles out of their way to save a few pennies on gas. Their mindset is truly “a penny saved is a penny earned” — regardless of how many dollars that penny cost. They’re frugal to the nth degree. And their costsaving measures may strike others as a tad extreme, if not unsafe (e.g., reusing paper towels and buying damaged cans of food from the discount cart).
How to reach them: Advertise rock-bottom prices — but more than likely, they’ll find you.
Relevant macrotrend: Control Freak SM
Values: control, prevention, safety, self-sufficiency
Demographic hotspots: Cheap is a lifestyle; look for them across demographics.
Where they’re shopping: Dollar stores
Find them online at: TheCheapBook.com, UltimateCheapskate.com OPPORTUNITIES
- Win loyalty now. Some value shoppers may have passed by more thrifty outlets when the economy was good, but now they’re giving those chains a first look. Here’s your chance to win fans and keep a portion when the economy improves.
- Calm consumer fears. Bargain Shoppers and Swing Shoppers are pinching pennies because they must, and they don’t all like it. They need to know that by trading down they’re not reducing quality, but gaining a better price on quality merchandise.
- Cater to coupon clippers. Bargain Shoppers never gave up on coupons, but now other value segments are clipping. Get creative with open-ended coupons, like a $1 off coupon on any purchase of $5+. Or level the playing field by honoring other merchants’ coupons.
- Get the gifters. Expect celebratory spending to take a hit as more practical gifting emerges. Still, loved ones will always make the cut. Let Swing Shoppers know that, at special times, it’s OK to spend a little to show the breadth of their love.
- Put a new spin on layaway. Reviving layaway strikes the right note with shoppers who want to dump debt but don’t want to forgo some purchases. Reposition it as the smart way to buy. And while you’re at it, rethink the Christmas Savings Club of yore by rolling that oldie but goodie into your current loyalty/reward program.
- Amp savings fever. Across all value segments, expect saving to prove addictive. Merchants will find that an even more savvy shopper will emerge from the shopping recession — one more willing to partake in value shopping to gain price control or simply for the thrill of the deal.
- Welcome the haggler. Merchants on the ropes shouldn’t look for pity from shoppers. Expect an empowered consumer who’s learning to haggle. Empower your sales associates to give haggling the green light. Shoppers will feel they’re getting unbeatable deals.
- Meet or beat. Price-comparison websites empower shoppers. Merchants can’t control the price-comparison game, but they can avoid losing by guaranteeing to meet or beat other retailers’ lowest price.
- Sell in bulk. Hordes are hoarding, especially the middle class. Offer bonus packs and bulk packs, even in unexpected places like traditional grocers and drugstores.
- Surf the channels. Memberships at discount club stores are sure to rise. Work to make your brand a strong presence in these channels, including site-to-store digital merchandising.
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