The Hypersensitive Consumer A retailer’s guide to 2009’s shop-shy shoppers How to catch them How to keep them How to make them buy A decade of conspicuous consumption is over. In the wake of the credit crunch and financial crisis, a new type of consumer has emerged: The Hypersensitive Consumer. They see themselves as time and money poor. They feel guilty about spending. They feel retailers are privileged to have them in-store. They’re less loyal than before, readier to go elsewhere or put off a buying decision if they don’t get excellent service. In short, they need stronger reasons to shop. This book is about giving them those reasons… “Some they ar Meet the Hypersensitive Consumer. Service should focus f Simon What drives their footfall, and Head E Almost all retailers have increased their focus on what converts visits into sales. customer service. pow em and s. ain vice Tr ser eat e 49 per cent of retailers have gr rvic r se ffe hip improved in-store design and O ons lati re ls facilities, and a third have improved d fa voi social aspects of their stores. A . n o i . t n s c e o . i a i t s c r i a e l e i t t o m i n : l p i r t i l o “If you look at the US retailers, a c . f s a t a n i n f i k n r c particularly in clothing, compared to o d e u o t o n t s c l m a e u e r r d d g the European retailers they have n f o r f o g a a i o r n s h s p a s e some very sexy stores. In the UK it is , e s i f g d m t e i o n n n e e i o l u y virtually impossible to do that l r u t t i Hypersensitive d o e r l a t n i u o S e b e i p a because of the cost of rent and rates.” Q l Consumers say k r p i a F a T O v A “Delight me” Simon Douglas, MD, Head Entertainment Im s e p Hypersensitive I r l n v e e v i m n e c Consumers W h s e e t n d a a o n t r in c iv r c r u expect multiple k e m o n 75 per cent of retailers have invested in e d t s if f o u s o o o l channels o t a r multichannel infrastructure, and half have d n i l m t l c l r i h fa i n c v e a h p ll e n r invested in additional online features. a i w fe n n c a e n i e l n t e g b u i l , r n s t e f . o r r f a s a f f . s e f t r ic r s u a ju c t n “Giving people an enjoyable s u d H t r a e s experience online is as important a C y n o d to them as walking into a store.” u ’d c Justin Hampshire, FD, A Crew Clothing cce p pt t rom h otio …b n ut k K eep eep at rev titu isiti des ng rem ain Key “If consumers want the Drivers of footfall product they will buy it, but they are more discerning in terms of paying full price for Drivers of conversion a product than they were 12 months ago.” Drivers of footfall and conversion Paul Allen, CEO, Jacques Vert e retailers forget that re there for the customer. e to me is and always d be the number one for a retailer.” 50 per cent of retailers have increased seasonal. Douglas, MD, 77 per cent have increased “You’ve got to think of ways of Entertainment in-store events. encouraging people to come to your space. Theatre is a big thing now.” iver del to Fle aff x o Alan Jacobs, r st pen ou Inc ing r y rea ho Jacobs Capital we al lau se ur son nc in-s s. er hes to ld p C an re bui on d eve at . sid eve nt th ing er nt s in es aff cel s. clu st eb din . on rity g ps ies en sea om do son con rse al e e me s nt. Virtually all retailers have invested in Hypersensitive Hypersensitive R some form of loyalty programme. a e Consumers want n w Consumers need D d a p if s r a f p d better and better a reason to shop O r e t r e l f i c o f c e e n i y service u a a r l t l a i lt s r a e y o t v e m p e w r n o y i e o t t t d s h h u , u n i r n n c o e g t b t w s r “There are too many loyalty d a a ju s 71 per cent will look around i t n , f s a fe s d t d p programmes out there which for a bargain, are less loyal to r c d v e e i a c le s n c n specific brands t if a c Hypersensitive i r o don’t really win the buy-in of the a c u e ly d n c n d u a t i Consumers s n consumer.” Half now expect more Almost half feel they s n . e t d fo x o r c m t from retailers than they did have less to spend are less loyal a m lu e r a s r g t i e i Nicky Dulieu, v g o to brands e t r n . o u MD, Hobbs p s Who are the Hypersensitive . Consumers? 71 per cent will pay full price 74 per cent are less t u for the right item or a treat likely to buy as a result o . b s Hypersensitive a t n of poor service t e n Consumers are e m r a m 81 per cent want a seamless p o better informed s . r c u n e r multichannel approach, 39 per cent a c o r i y e t v r k m 50 per cent of retailers have simplified want consistent service and product s u a e c s e s n h n e d c o their pricing structures. e n c s a o t d e g n n t ’r i e a u ic n s o r r s y p e e , t n e t in e r c v u u i s e t Hypersensitive Hypersensitive d h i n t t E o e “I think people are using the internet r e p p s Consumers are Consumers are m U o more to research before they buy c canny about pricing hunting for value because they’re more concerned about value and not wasting money.” e. alu d v Nick Hollingworth, CEO, the goo e… ne ou itiv ed s y pet h Austin Reed ns… for ke m wit di ma co d sco at are ran t unt wh lly r b he ing m rea ou m t an the u e y igh d ell yo in g tly T ure erm an tar s nd g. d r get ake ’t u tin in evie ed. M on un vol wi t d sco atil ng: bu di e. con … ess sum edl er ne “It is much more than discounting, it is about the value of that product. It is about 60 per cent of retailers have how desirable and gorgeous we can implemented discount schemes. make that product. We look at an item and ask: what is our customer prepared 36 per cent have cut prices to pay for this? ” across the board and 23 per cent have made efforts to Patricia Alford-Burnett, MD, increase price transparency. The White Company 1 The Hypersensitive Consumer A retailer’s guide to 2009’s shop-shy shoppers Capturing the Hypersensitive Consumer After over a decade of relatively benign conditions, retailers – and shoppers – were So who is the perhaps becoming set in their ways. But the credit crunch ended all that. There’s 2 been a sea change in consumer behaviour, and retailers that can’t respond are paying Hypersensitive the price. In this report, we look at what’s going on, and what retailers can do to Consumer? succeed in today’s unprecedented conditions. In previous recessions, wrenching the price lever up and down would generally do the trick. But that isn’t working so well this time around. Now there are more factors 3 Eight challenges for in play, and a broader response is essential. retailers and the strategies for success Today’s consumers are so sensitive, so well informed and so surrounded by choice that we’ve called them the Hypersensitive Consumers.