Making Sense of New Buying Habits
Customer buying patterns are changing radically, the good news is that suppliers are accommodating for that change.
Traditional buying seasons and patterns are under increasing pressure as consumer demand and expectations change. There is less certainty in how customers will feel and spend in 12 or even 6 months’ time so there is little logic in committing vital budget that far ahead.
How can retailers best serve their customers and plan well for key seasonal promotions and events in the new consumer landscape? Inside Retail surveyed a range of independent, multiples and pure-play retailers in the home and gift sectors to find out.
This is what they told us.
THE CHANGING CONSUMER
Retailing has always been about change and attracting customers with new products and looks. But today’s retail world is changing in a way we have never seen before.
Customers are behaving differently and believe they are empowered to shop wherever and whenever they want. They are no longer being dictated to by retailers curating collections put together by their buyers.
A staggering 49% of retailers said that is now difficult or very difficult to predict how their customers will spend over the next 12 months.
As a result, the traditional buying seasons make less commercial sense when the real requirement is for retailers to be able to respond faster and closer to the season. Retail buyers are more and more inclined to buy stock frequently and reactively throughout the year.
Unsurprisingly, Christmas is the most important trading period for 65% of respondents but even this most important and predictable season is being changed with the rise of pre-Christmas sales and discounting and Black Friday. For online-only retailers, a large group within the survey, Christmas is shown to be even more important for them.
Easter, Valentine’s Day, Halloween and the school holidays are all cited strongly as promotional opportunities.
It is also important for retailers to capitalise on popular, one-off events. The Centre for Retail Research showed for example that the birth of the new Royal baby, Princess Charlotte, generated more than £80 million in retail sales with £27 million of that total being driven by souvenirs. It demanded a very fast response from suppliers and then retailers to meet this opportunity and special occasion which consumers wanted to commemorate.
MEETING CHANGING DEMAND
So how are retailers responding to these changing consumer spending patterns? The difficulty in predicting how consumers are going to react makes for difficult buying decisions and planning.
31% of respondents say that with customers now always looking for new products they are having to change their buying pattern and bring it closer to season.
When this is translated into actual retail buying, the survey underlines the extent to which retailers are becoming more flexible. It shows for example that 15% of those responding will now leave up to 60% of their budgets to buy closer to the season. 21% – the biggest percentage of respondents – say that they will allocate 30% of their budgets closer to season. Compared with three years ago, 27% of retailers said that they had reduced their forward ordering. The reasons, apart from having to find new products to appeal to customers, reinforce the changing consumer picture by citing the fact that it is now important to manage budgets, the fact that there is better availability of stock closer to season and to be able to forecast better.
The improved availability of stock would seem to be a crucial factor in helping retailers manage their buying closer to season. A staggering 70% of respondents said that suppliers have made it easier to stagger buying patterns across the year.