Hunt for Holiday Bargains, Daily Deals Begins

With 84 percent of U.S. consumers planning to spend less or the same on Christmas season shopping in 2011 compared with 2010, GfK research tells retailers to mark this holiday season by carefully monitoring and rapidly responding to changing consumer needs online. GfK’s annual consumer spending survey found that 40 percent of U.S. households will spend less this Christmas, while 44 percent will spend the same as they did in 2010 leaving only 11 percent planning to spend more. The most significant driver now is finding the “best price” for gifts, according to GfK, as that was selected by 96 percent of shoppers.

”The competition between online and brick and mortar retailers will continue to intensify as the challenge for all retailers is compounded by shoppers who feel more in control of the purchasing process than ever before (70 percent) and who feel that retailers and advertisers have less influence over them (50 percent),” said Lew Paine, the senior vice president of GfK’s consumer segment. ”This continues to reduce consumer loyalty to retailers. In fact, according to our ‘Future Buy 2011 Consumer Study,’ more than half agree that they are less loyal to any one retailer because they need to shop around more to find the best value.”

Regardless of where shoppers make their final purchase, the majority of consumers will use traditional websites to find that best deal, so GfK recommended that retailers remain acutely aware of an impending wave of consumers looking towards daily deal websites and social networks that continuously engage customers and often offer the best prices. GfK found that 39 percent of respondents will use social deal hunting websites, such as Groupon and LivingSocial, to find the best bargains this Christmas.

Among the ”Influential Americans,” a term GfK defines to be 10 percent to 20 percent of consumers who are very product and social media savvy, the percentage of deal hunting rises significantly. In a sign of deal websites’ growing significance, 58 percent of Influential Americans will use them and 66 percent will use social networks to find product deals this Christmas. The higher response among the bellwether Influentials suggests more growth for online deal-hunting, according to GfK.

”For online marketers to succeed this season, they will need to leverage all touch points of the shopping experience,” said Alison Chaltas, the executive vice president of GfK’s interscope segment. ”Our ‘Future Buy 2011 Shopper Survey’ shows that online shoppers are deeply involved in the shopping experience — using blogs, research sites, couponing and email exchanges to optimize their shopping results. We are seeing a new shopping process emerge where retail marketers have less influence on buying decisions and shoppers planning and prioritizing their purchases like never before.”

So with indications of an uncertain Christmas shopping season, the appeal of getting the best deal will fuel consumer shopping behaviors and the convenience trend of obtaining deals and coupons straight to one’s mobile phone will continue to grow, GfK concluded.

In its report on consumer trend, Accenture found that 37 percent of consumers surveyed held memberships with daily deal websites. Accenture believed that retailers will face significant barriers when raising prices in response to higher costs, especially in the case of food products. On the other hand, Accenture found that clothing mark-downs could stimulate buying. About 30 percent of consumers were motivated by a discount of 30 percent, while nearly 18 percent were willing to open their wallet for a discount of 20 percent. Another 30 percent said they would wait until clothing prices were reduced by half before they were willing to buy.

Accenture found mixed reactions to daily deal websites though. Their survey noted that younger consumers and wealthy shoppers were most likely to use their memberships in daily deal websites to save money on purchases. However, 56 percent of U.S. shoppers did not subscribe to a deal site and 42 percent of respondents said they “do not like anything” about daily deal sites, according to Accenture’s survey.

Among respondents from households earning at least $150,000 a year, 54 percent subscribed to a daily deal site, compared with 27 percent of respondents from households that earn $35,000 or less a year. In addition, 47 percent of those 18 to 24 years of age currently subscribed to a daily deal site, compared with 37 percent of those between 55 and 64 years old.

”The daily deal craze is still strong, especially with young consumers and people with higher incomes who can make their purchases right away,” said Tom Jacobson, the senior executive of pricing and profitability strategy at Accenture. ”But it is interesting to note that a significant group of Americans do not like the deals and are conceivably finding other ways to save.”

Jacobson noted that the proportion of consumers who belong to daily deal sites increases with income, and those with higher incomes are more likely to belong to several daily deal sites. As a result, he said, retailers must incorporate deal sites into their channel strategies in order to reach this customer segment.

Nearly four in 10 subscribers to daily deal sites said they are using the sites more often now than one year ago, with more than one in four saying that the deals entice them into purchasing goods or services they otherwise would not purchase, according to Accenture. However, the survey also found that many daily deals members do not redeem the items or services right away. One in four did so in one to three months, while more than one-third redeemed the deals within one to four weeks.

The biggest gripes: Most of the deals were not for items or services that members wanted to use or try and 24 percent said that most deals were not local enough to interest them.

”Businesses need to strike a balance between providing customers, particularly in the upper-income ranges, with new experiences they would not normally try, while not providing too many esoteric deals that serve only small portions of the customer base,” concluded said Jacobson.

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