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Discount retail: attracting and keeping shoppers

Discount retailers, either in the grocery sector or single-price-point category, were one of the big winners during the recession. Now, as we enter a new period where shoppers are less hard-pressed, how will discount brands find a point of difference and continue to persuade shoppers to choose their offer? 

Understanding consumer perceptions across the discount category as a whole helps smaller brands understand where they rank in terms of awareness, salience or consideration. In the real world this makes a real difference as these retailers tend to locate themselves in commercial environments where estate is cheaper (e.g. open air retail parks). 

We ran an exclusive panel question which asked simply ‘Which of the following retailers currently offers the best value for money for you and your family’? The results, based on 1,171 consumers (63% females and 37% males) are presented below and show, perhaps unsurprisingly given the rapid growth of the brand, that Aldi was the most commonly selected store. It is followed by a second tier of brands including Iceland, Primark, Wilkinson and Poundland which collect between 12% - 14% share of endorsement each.  

 Discount retail blog

Additional value can be extracted from the data by mining the results according to key characteristics that define a brand’s target demographic. For instance, our analysis showed that Primark’s value for money rating was higher amongst female consumers than males. More advanced research solutions would create segmentations, defined by an array of shopper characteristics, which would then allow more targeted insights to be developed.

Once you have attracted consumers in-store, it is also important to unpick their experience of your brand. This will directly correlate with the customer's satisfaction, propensity to return and their advocacy. We have a variety of ethnographic and qualitative solutions as our disposal to measure the following:

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A key winning formula for brands during the recession was ensuring that the retail proposition was exactly right for a particular consumer group. This was not unique to discount retailers; indeed some of the fastest growing retailers over the past few years such as Office and Cath Kidson have achieved growth through a clear brand profile and effective marketing. In order to do this effectively, however, you need to understand your customer’s mindset and expectations using a range of tools such as segmentation, mystery shopping or virtual shop-alongs. 

Dave Ruston, Associate Director at Research by Design, said that “We ran this small insight piece into discount retailing to highlight some of the profound differences in consumer mindsets.  In a fiercely competitive category, insight is key and the winning brands will use intelligence about target audiences to their critical advantage”  

With Tesco recording massive £6.4bn losses and their CEO's comments about the 'accelerating pace of the discount retailers investments worrying him' (Marketing Magazine) you would be forgiven for assuming the likes of Aldi & Lidl were safe in their position of power.  It seems Dave Lewis is learning from the success of these discounted brands, by recognising that the; "biggest single impact you can have on somebody’s appreciation of [our] brand is the experience when they walk through the door[.]" (Marketing Magazine)

Discount and non-discount retailers need to ensure their 'in-store' experience is positive if they wish to see customers returning, especially with new competition from digital sources and the exponential growth of mobile shopping!

By Dave Ruston 

This entry was tagged Communication, Retail & leisure, Retail, Consumer, Shopping, Discount retail and posted on April 24, 2015

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