With Christmas only 10 days away, retailers are trying their hardest to convince shoppers to spend their cash by bringing sales forward and offering more discounts than in previous years. But what happened to building loyalty and rewarding shoppers with extras rather than slashing prices?
Retail marketers have been talking about engagement as the cornerstone of long-term success and loyalty, but it seems that strategy is at odds with the ever increasing number of discounts retailers are launching in the run-up to Christmas to entice shoppers.
Obviously shoppers, myself included, appreciate a good deal at Christmas but retailers are doing so much price based marketing to get consumers to part with their cash, they are shooting themselves in the foot in terms of long-term loyalty.
Two pieces of research have come my way this week that should really make retailers think before they slash prices in festive discounting.
In its annual Loyalty Report, loyalty firm Maximiles, found that retailers are “squandering” brand loyalty by relying on heavy discounting ad promotions at Christmas. After all the hard work and marketing that has gone into building up that brand loyalty over the year, to “squander” it at the last hurdle seems like the wrong way to go.
The report found that eight out of 10 shoppers will not continue to shop with a brand after taking advantage of a Christmas discount or promotion, not exactly a long-sighted solution.
Surely, retailers should be focussing on building momentum for sales throughout the year, rather than a big bang at Christmas. Particularly since the looming rise in VAT to 20% and the public spending cuts will further impact on consumer spending.
Guy Keeling the managing director of Maximiles puts it well when he says that retailers are “undermining” their reward programmes.
“All retailers want those peak sales for the Christmas period but how many are thinking about the morning after?” he asks.
Another piece of research, by loyalty firm ICLP whose UK managing director Stuart Evans writes a column for the Retail Marketing Focus, has identified that Asda is the retailer that UK consumers would most like to introduce a loyalty programme.
The supermarket that has long claimed that its “Every Day Low Prices” strategy earns it the same kind of loyalty as a reward programme, which is why it doesn’t need one.
However, the fact shoppers are calling for an Asda loyalty programme more than any other retailer, speaks volumes.
The choice shows that despite Asda’s strong focus on price, shoppers want more than that, they want an on going and personalised relationship, which cannot be achieved through price alone.
Keeling sums it up nicely I think: “Entrenching customer loyalty is not something which can be done with seasonal promotions. Flash in the pan deals are not what keeps the customer coming back for more.”