Why pulling advertising during a tough economy may backfire

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According to Dr. Marianne Bickle, Professor and Department Chair for South Carolina University’s Department of Retailing and author of The Changing American Consumer, perception is reality for American consumers, and everything from political campaigns to pop culture plays a part in how we spend.

Working with over ten years of consumer research from BIGinsight, Dr. Bickle analyzed the consumer trends that emerged at the beginning of the 21st century conjured from the attacks on 9/11/2001, and how the economic events that followed formed a new kind of consumer. Read on for Bickle’s assessment of how retailers can use the socioeconomic lessons gleaned from recent research to refocus their strategies in an ever-changing marketplace.

Dr. Marianne Bickle, Author, The Changing American Consumer

A big theme in your book is how the events of 9/11 changed the nation’s perception of economic reality. What examples did you find of Americans evolving to the contemporary consumers retailers know today?

Perhaps the biggest change in consumers’ perception of economic reality is that it is not a guarantee that children will be better off financially than their parents. Grown children are moving back in with their parents. The growing national debt, foreclosures on houses across America, phenomenal credit card debt incurred by consumers and unemployment rocked consumers’ sense of stability. For the most part, consumers learned very valuable lessons: that a stable economy is not guaranteed, saving is everyone’s responsibility, and being fiscally wise in all purchasing matters is smart – not stingy. As a result, consumers have responded to retailers’ promotions, coupons and discounts. Value is more than just a word. Retailers are being challenged to provide more than products and services. Consumers are making retailers earn the respect of being one worthy of the consumer’s patronage.

The Washington Trifecta you describe as politics, national security, and taxes plays an important role in how Americans shop. How have you seen the retail industry adjust and react to opinions of the U.S. Government that have affected consumers shopping habits?

Politics, national security and taxes play a very important role in how Americans shop. As the nation continues to struggle through its political woes, challenges over national security and debates on taxes, consumers stated their opinion with their wallet. Beginning in 2008 consumers said, “No thank you,” to retailers. Consumers’ shopping habits slowed down dramatically. Things became a bit better for retailers in 2009 through 2010 as the Washington Trifecta calmed down. Still, retailers’ sales figures are not what they were 10 years ago. What we do know is that when national security spending and taxes rise, consumer spending declines. As for politics, consumers are very displeased with many of the men and women in office.

In the chapter “Let the Retailer Beware: Consumers are in the Driver’s Seat”, you discuss how technology has changed the shopping experience. Which were the most effective tactics you saw that retailers used to adapt to and meet consumer demands?

In 2008, retailers took a huge beating when the economy plummeted. Consumers learned to save, spend using cash and pay down debt. Retailers learned to become more competitive by coupons and promotional codes through the store’s website. Online retailers began offering free shipping with a minimum order.

With mobile usage on the rise, what new ways do you see retailers utilizing this medium to enhance socialization and virtual relationships with customers in the coming years?

Consumers of all ages use mobile devices to communicate. Phone calls, text messaging, the Internet, Facebook and YouTube have dramatically changed how we communicate, interact with one another and promote merchandise and services. Mobile devices, specifically smartphones, are increasingly being used to promote timely sales, coupons, and merchandise or service offerings. A few sentences via a text message can stimulate customer traffic with the simple phrase “sale 2 day – 50% off.” Mobile devices guarantee that the retailer’s message is delivered right to the consumer regardless of his or her location. This method of promotion serves two purposes: (1) It stimulates socialization and a relationship between the retailer and consumer, thereby instilling loyalty, and (2) encourages the mobile user to become a retail ambassador (i.e., forward news about the retailer).

What were some similarities and differences you found between catalog, TV and online shoppers?

The biggest similarity among consumers regardless of how they purchase is the desire to save, making coupons and discounts very important. Consumers are using the Internet to find out information on products and services. Men and women equally purchase through catalogs and the Internet. More men shop through TV than do women (67.1% vs. 32.9%). Over 40% of the consumers who shop at home are married.

You say that the sign of a real economic recovery is when consumers start spending similarly to how they spent prior to the recession. What, if anything, can the retail industry do to catalyze consumer confidence?

Oftentimes retailers cut back on advertising and/or promotion when hard economic times hit. This is a big mistake. Consumers must always have confidence in your company, your brand and your employees. The minute consumers see a weakness in the company’s product or service offerings they will probably start to shop elsewhere. It is critical to the financial success of any retail organization to show a strong front to its consumers. This means that retailers should:

  • Continue to promote the business during difficult times;
  • Conduct promotional events that bring consumers into the store (e.g., trunk shows, fashion shows, demonstrations);
  • Have a strong and constant social media presentation; and
  • Always maintain visual appearance of the store and website.
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