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Making the most of frugal shoppers


Anna Uprichard, Regional Lead, Commerce, EMEA (ex. DACH & CEE) at BHN, explores how retailers embrace sales promotions, gift cards, and collaborations to satisfy frugal shoppers.

13th Sep 2023

Despite inflation showing signs of settling, consumers are still cautious, and this will naturally have an impact on retailers. Rising costs, supply chain issues and consumer confidence are all challenges they need to consider. 

The IPA Bellwether Report found that marketing budgets did, however, grow in Q2, with a special emphasis on sales promotions budgets. These were revised to their highest level in the 23-year history of the report and are attributed to retailers wanting to offer better prices to combat the cost-of-living crisis. 

This shows retailers are listening to consumers and changing their strategies based on current consumer needs. Offering the best deals in order to retain and attract customers. But, building brand loyalty in these trying times can be tough.

Understanding buyer habits

Research from Blackhawk Network (BHN) found that 59% of consumers are planning to change their shopping behaviour in ways that go beyond simply taking advantage of sales promotions. For example, within the retail industry, we have seen a huge uptick in people using gift cards for self-use in order to help with budgeting. 

In fact, 36% of people plan to buy a gift card for themselves in 2023, and for nearly a third of people (29%), this is to help manage or control their spending. This trend is especially prominent in the gaming sector, where parents are purchasing gift cards for children to use rather than connecting bank accounts to avoid overspending. 

This is a huge opportunity for retailers because it can help boost sales in a number of ways. Firstly, there is an increase in revenue due to the sale of the gift card itself, but by offering the right gift card in-store, shoppers are more likely to shop for other goods at the same time as purchasing the gift card. This ensures larger transactions and, ultimately, more revenue. 

By understanding even the smallest shifts in buyer habits it ensures that customers continue to spend and, most importantly, don’t go elsewhere. 

Capitalise on other brands 

Competition within retail is fierce, but it’s also changing shape. Across the board, brands are working together on mutually beneficial partnerships in order to increase sales. For example, Sainsbury’s closed 200 of its cafes in favour of big branded coffee shop concessions such as Starbucks and Caffè Carluccio’s. And fashion retailers such as Next now stock rival brands like GAP. 

Working with competitors can actually strengthen sales.

Traditionally, brands kept their cards close to their chest, but working with competitors can actually strengthen sales — especially in trying times. Letting competing brands into your stores can, in some instances, be commercially astute and create footfall drivers into your estate, which ultimately leads to the overall benefit of the host retailer.

Amazon, which acts as an online marketplace, is a great example. We are starting to see this model transpose into the physical space - and traditional own-brand-only retailers.

Building sustainable loyalty 

Delivering an optimum shopping experience will help with both customer acquisition and building long-term loyalty, but on top of the IPA Bellwether findings, BHN research found that 44% of consumers said they are buying more products on promotion and 31% are using more vouchers and coupons when shopping. This again creates another opportunity for retailers. 

44% of consumers said they are buying more products on promotion and 31% are using more vouchers and coupons when shopping.

By offering rewards and vouchers or special discounts, it makes consumers feel valued and more likely to keep coming back. Competition is especially tough within the grocery market, so being creative with incentives and rewards can be the difference between gaining or losing a customer. 

No silver bullet 

The retail market is resilient because it has had to deal with many challenges over the last twenty years, from the rise of digital and ever-changing consumer habits through to financial crises and Brexit. There is no silver bullet to success. 

Those who will do well will be the ones who listen to the market and don’t just understand the shifts in customer behaviour but are also willing to do what it takes to make sure their needs are met. Whether that is investing in promotions and rewards, ensuring the right variety in store – or even partnering with competitors. 

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