Sharp Price Cuts Good for Shoppers?

The shopping industry has seen a number of recent changes due to the economic cycle, which has moved into a recessionary phase. As consumers tighten their purse strings and their spending on essential items, there could be a decrease in sales, especially for non-essential items.

Competition is rife:

As the economic recession cycle continues, competition within the shopping market will get fierce and will result in some shops having to close as they can’t compete with some of the larger stores. Inflation is also a risk during this time with sales coming under pressure and expenses going up as inflation starts to pinch your wallet.

The retail recession is here and with vengeance, with so many shopping centres being boarded up as shop after shop is closing. There is however one retail outlet that still manages to make a profit during tough times, and that’s the internet. Recent 2009 figures show that online shoppers are spending £10 on average more than last year. This means that a typical online shopping cart is now worth £131.76, which is up from £121.69 a year ago.

Buying behaviour really has changed with recent trends showing that shoppers have become much more price-sensitive and more willing to switch between shops and brands in order to get a better deal. While larger stores are continuing to do well, we are also finding that competing retail channels have really been turning up the heat… This is certainly the time for both retailers and manufacturers to conduct frequent and granular consumer and market assessments and develop consumer-centric marketing strategies.

Grocery shopping hasn’t suffered and effects by the change in the economy with an online survey concluding that 31.7% of respondents of online shoppers had reduced the amount they usually spent on purchasing groceries via the internet, whereas almost two 64.8% of online shoppers reported that there was no change in the usual amount they would spend.

What else could the recession bring?

The downside of this economic fluctuation is that the shopping industry will see sporadic changes and become very unpredictable. At certain times it will seem like customers have completely vanished while other times will bring in an influx of eager customers and produce some sort of sales boom.

Another downside to the crunch that is the lack of credit is the decrease in interest rates, you may be thinking that this is a good thing and it would indicate low interest rates, however the only problem is, since there will be a liquidity crunch in the monetary markets, you could have a tough time qualifying for a loan as lenders qualifying standards go invariably higher.

87% of UK shoppers are making changes in reaction to the recession, with four key attitude groups among shoppers. ‘Unaffected’ contribute to 13% of shoppers who seem confident that their existing and future spending patterns won’t be affected. ‘Planners’ make up 15% of shoppers that haven’t been affected yet but are making changes just in case. 48% of shoppers fall into the ‘soft reactors’ category. These shoppers claim they have had to make changes to their spending because of the recession, however small they may be. And finally ‘strong reactors’ represent 24% of shoppers who declare that they have been seriously affected by the current economic situation and are having to make major changes to their spending habits.

The current recession crisis is forcing us all to evolve - with the idea that only the fittest will survive!