“It’s not just about price anymore,” says Goodfellow. “It can be service. For an online retailer it might be shipping. [It’s simply] other methods of making customers feel value and making them feel like the money they spent in the store was well spent.”
As consumers embrace value, they’re also opening up their wallets to a little fun. Maybe they can no longer afford impromptu shopping sprees or long, luxurious vacations, but they’re treating themselves again. Steve King, partner at Emergent Research, which analyzes the small-business economy, suggests that retailers see the trend as a marketing opportunity, positioning themselves as a place where consumers can reward themselves.
“We’re seeing a definite increase by consumers in mini splurges,” explains King. “Because consumers can no longer afford the big things—the vacations they used to have, the fancy new electronics or expensive clothes—instead they might buy a nicer item at Starbucks or buy a small item that is really a splurge and brings some psychic value at that point in time. We’re definitely seeing this idea of, I’m concerned about value and I have to keep my costs down, but at the same time when something happens I want to reward myself.”
The exception here, however, is the wealthy consumer, say experts. This consumer has greater disposable income and shops the luxury market. Retailers who target her—or who are interested in targeting her—should know that she is interested in value but has no problem spending substantially more than the average customer for what she wants.
“In the luxury market, we see a return to normal buying patterns. The way our economy has shifted, people who do well are continuing to do well. It’s the rest of the folks who are going to be value based,” says King. “As [a retailer] you’ve got to be very value focused or you’ve got to have something that appeals to wealthier customers.” He explains that value also appeals to wealthier customers, but it’s usually a combination of value and something else, “some sort of kicker that makes it attractive to wealthier people,” he says.
One shouldn’t assume, however, that because consumers aren’t watching every dime, they aren’t shopping wisely. Consumers added a number of shopping tricks to their bags when price was king, and though they’re no longer looking for the cheapest prices, they’re still interested in getting a good deal.
“Customers have become smarter shoppers, whether they’re shopping on their smartphones and comparing prices while in-store, [or] clipping coupons, comparing advertisements
[and] doing online research,” says Goodfellow. “So when consumers walk into a retailer now, they’re armed with the best knowledge possible, and [with the confidence] that they’re getting the best deal from that retailer—so they feel better about their purchases.”
Experts emphasize that consumers are now arriving ready to shop armed with online research—including product information and competitive pricing—and ready to use their smartphones. They’re running with the Digital Age—not against it—into the beauty store, the grocery store, wherever they’re headed. And stores should be running with them. “Retailers should accelerate their integration online and [in terms of] mobility,” says Karen Grant, vice president and senior global industry analyst for market-research firm NPD Group.