Australian shoppers have never been easier to win with a discount, or harder to keep once it ends, with new research finding over nine in 10 have already switched brands for a better offer and nearly four in five have visited a different retailer for an offer.
The new joint report from Shop! ANZ and consumer insights platform Vypr, The Retail Influence Report: How Pricing and Promotions Shape Shopper Behaviour, also reveals only one in 100 Australians says an offer has never changed their brand decision.
Promotions appear particularly capable of disrupting the loyalties of shoppers aged 35-44. More than two in five in this age group say they often switch brands because of a promotion, while almost half often change retailers to take advantage of an offer.
As the cost of living rises, the pressure behind this behaviour is only building. More than four in five Australians say price has become more important when deciding what to buy compared to a year ago, including nearly half who say it is much more important.
But the same research suggests that shoppers attracted by those offers are unlikely to stay at full price. While almost three in four are prepared to pay up to 10 per cent more for a better-quality product, less than one in eight would pay a premium of around 20 per cent or more. This premium price tolerance reduces with age as one in four shoppers aged 65 and over say they would not pay any premium at all.
Vypr chief revenue officer Sam Gilding said the gap between how readily shoppers switch and how little extra they will pay points to a customer retention challenge that discounting alone cannot solve.
“Promotions are changing some of the most fundamental shopping decisions Australians make, from the brands they choose to the retailers they visit. While nine in 10 shoppers have been persuaded to buy a different brand and most have gone elsewhere for an offer, loyalty can no longer be taken for granted,” he added.
“There’s a temptation to judge a promotion on the volume it moves in the week it runs, but that’s only half the story. The real test is what happens in the weeks afterwards. If a brand is recruiting shoppers heavily and then losing them to the next offer on shelf, it’s funding a cycle rather than building a base. The window to prove your product’s value is narrow and the price tolerance on the other side of it is thin. If your product doesn’t justify itself once the offer comes off, you’ve bought a transaction, not a customer.”
While promotions are proving highly effective at encouraging switching, the report also shows Australians are not simply looking for the cheapest product available. Better quality (34 per cent) remains the strongest indicator that a product represents good value, ahead of promotions or discounts (19 per cent) and lower price (17 per cent).
Shop! ANZ general manager Carla Bridge said that where the offer appears matters just as much.
“The brands getting the most from promotional investment aren’t necessarily the ones spending the most,” she said.
“They’re the ones making the same value proposition easy to recognise wherever the shopper meets it. Australian shoppers may find an offer through a website, app, catalogue, email or social media, but it still gets validated at the shelf.”
Meanwhile, in-store advertising remains the strongest source of promotional awareness at 52 per cent, ahead of TV (42 per cent), catalogues (36 per cent), email (35 per cent) and social media (30 per cent).
Special price tickets (60 per cent), promotions (41 per cent) and price labels (28 per cent) account for the first attention in-store, and clear value communication remains the strongest way to cut through.
