Anyone who has seen the mayhem at the post-Thanksgiving Black Friday sales knows how passionate some consumers are when it comes to getting discounts. Thankfully, in light of social distance rules, post-pandemic shopping won’t have the same frenzy. However, the desire for deals remains fierce.
With the loosening of lockdown restrictions due to the vaccine and a decrease in COVID infections, stores are re-opening their doors and hoping to rekindle the spark for in-person shopping. After months of being stuck at home and as summer approaches, consumers are ready to hit the stores—and they have high expectations for discounts.
Consumer buying patterns
Consumer buying habits are fueled by how they feel about what’s happening in the world. The panicked bulk buying and hoarding that created a run on essentials like toilet paper and hand sanitizers indicated the widespread fear at the start of the pandemic. The hunt for necessities topped the desire for bargains.
When lockdown restrictions tightened, leading to widescale store closings, consumers turned to online shopping in droves, primarily out of necessity, and to some extent, for retail therapy. E-commerce marketers welcomed the influx of shoppers and further enticed them with online discounts, including luxury items that would usually be outside their budgets.
As the pandemic intensified, unemployment rates jumped to unprecedented levels. Despite an initial boost in consumer spending thanks to stimulus payments, the overall impact of the pandemic on the retail industry has been crippling. Unemployed consumers, or those facing job insecurity or other life challenges, are spending cautiously and looking for bargains more than ever. Marketers know this because they’ve seen it all before.
Lessons from the past
The financial crisis, which began at the end of 2007 and lasted well into 2009, devastated the US economy and resulted in unprecedented job loss. As a result, consumers severely curtailed their shopping habits, putting a sizeable dent in the retail industry. Retail sales nose-dived to the lowest they had been in over 30 years.
The dollar store was the only retail segment that did well during the recession, a sure sign that consumers focused on spending less. During that period, thrift stores and other less-than-retail marketers also grew in popularity. Customers were eventually lured back into retail stores with deep discounts, which some analysts believe was the start of a retail world that is “permanently on sale.”
Enter the bargain hunter
The economy shows signs of improvement, but with unemployment still high at 6.1%, consumers are spending carefully and looking for savings. It’s doubtful that shoppers will ever abandon the convenience of online buying. Still, they also relish the in-store, tactile experience, often a social outing with family or friends. Recent Harris Polls tracking pandemic statistics found that two-thirds of Americans miss shopping in stores and are ready to shop in person again.
According to GlobalData, most bargain hunters are young parents with children under 18 (53%) or have three or more people living in the household (62%). Retail Managing Director Neil Saunders said recently that bargain hunting is coming back with “a little bit of a vengeance.” He thinks the value segment especially could see an influx of shoppers.
Marketers are facing stiff competition as shoppers return with more cost-conscious mindsets. The pandemic created a rift between marketers and consumers. As stores re-open, retailers have the chance to rebuild trust and forge new relationships. A pricing strategy that emphasizes affordability is a great way to start.
Tips for pricing strategies and promotions
- Make budget-friendly options a top priority.
- Differentiate products from the competitor so consumers will buy even without a sale.
- Take a data-driven approach to discounts rather than based on instinct.
- Create a customer loyalty program based on the total amount spent at your retail store.
- Limited time discounts create a sense of urgency and a perception of value.
- Collaborate with other local retailers to join discount partnerships.
- Offer bundled discounts that lower the price of a group of items bought together.
Bargain hunters are savvy shoppers who know how to time their purchases to fit the holiday and seasonal sale cycles. They use apps to scan items and to find deals, coupons, and promo codes. They aren’t shy about going to thrift stores and dollar stores. Wherever there’s a bargain, that’s where they’ll be. Marketers are wise to meet them where they are in their post-pandemic quest for bargains.