gekkofm

The cost of living crisis has had a dramatic impact on consumer spending with brands needing to focus on value and the longevity of their products to win customer loyalty. These were some of the key findings from a new research report by marketing agency Gekko.

The survey of 2,165 respondents carried out by YouGov in August commissioned by Gekko, revealed that two thirds, 66% have cut back spending on ‘personal non-essential considered purchases’. These are defined as non-essential purchases that have a degree of financial or emotional investment.

Meanwhile more than 4 in 10 (43%) of people have cut back on spending on ‘essential household items’ due to the increased cost of living.

The re-considered purchase

For personal non-essential considered purchases, 52% of 18-24 year olds have cut back on spending, compared to 68% of 25-34 year olds and three quarters (75%) of 35-44 year olds. The categories hit hardest by a cut back in spending of consumers of these goods are: Consumer electronics and homeware and home furnishings with 61% of consumers of these goods reducing spending. Clothing & apparel 60%, DIY and garden, 50%. Baby and child, 41%.

In today’s environment the number one factor making people consider a purchase in the consumer technology space is that something is within budget, 69%, durability/ being fit for purpose was next, 52%. Third in the list was sustainability, still favoured by 23% of respondents. Brand awareness was favoured by just 13% of respondents. For Gen Z (18-24 year olds), the result for sustainability was far higher at 38%, suggesting the need for a tailored approach for brands to remain relevant in the current environment.

Brits slash spending on essential items

For essential household items, more than 2 in 5 respondents revealed they had reduced their spending (43%). Of these, 1 in 3 (32%) have slashed spending on essential household items by more than 15%. 3% have cut spending on essential items by more than 50%. There are some significant variations, based on gender, location, age and financial situation. 48% of women have reduced spending on household items, vs 38% of men. Of those who have reduced their essential household spending, home owners (of any type) are the most affected, with 63% saying they had cut spending by up to 15%, compared to 51% of renters.

Londoners are least likely to cut spending significantly. Of those who have reduced their spend on household essentials, just 2% of Londoners are cutting spending by more than 50%. Meanwhile in the East of England this rises to 6%, and 7% in the North West.

Millions of Brits looking to switch brands

Brand loyalty has plummeted in the current climate. 60% of people would switch brands for essential items and 48% of people revealed they are more likely to switch non-essential considered purchase brands. Men are less likely to consider switching their considered purchase brand choices, 43% versus 52% of women.

Commenting on the findings Daniel Todaro, Managing Director of Gekko said: “The results highlight the dramatic but also the uneven impact of this cost of living crisis. There is certainly no generic strategy for brands wanting to remain relevant in the current economic climate. These huge variations in choice are clearly based on income level, age, gender and location. No longer is desire beating need when making choices.”

He continued: “While large numbers of people are being seen to be cutting spending on considered purchases, it is now implied that brands should focus on price and durability as the two key factors driving buying decisions. Ephemeral qualities like brand values seem less important in today’s climate. However it is important for brands to have expertly crafted messages for different audiences with sustainability still crucial, in particular for younger audiences. Having the right tone and audience-centric approach may assist brands in weathering the turbulent times predicted ahead.”

To read the full research click here

With the average turnover of staff or attrition rate, at 63% in retail compared to the national average of 15% across all employers, isn’t it time that retailers take stock of this a little bit more? Considering how much it is estimated to cost retailers – a recent report cited that globally retailers lose $19 billion each year on new staff costs –  it’s a false economy not to treat your staff as a highly valuable asset. Instead, much of what is spent on recruitment could be channelled into refreshing stores and training staff to enable them to be effective in their roles and provide an exceptional customer journey for shoppers.

The focus should be on retention rather than recruitment and with over 32% of retail staff stating that they receive no formal training at all, it’s a critical part of the puzzle that creates the whole picture for your customer experience.

Brands know this and that’s why they invest millions each year to train third party retail partners. New starter or induction training isn’t where staff training should begin and end. An ongoing plan for individual staff members is essential, with regular reviews and new initiatives implemented. Also consider all the brands that come in and train your staff week in, week out and then compare that to the training you deliver to your staff. How does your internal training stack up in comparison and ask whether your own training benefits your employees and enables them to be the best that they can be and are motivated whilst doing it?

It’s recorded that one in three staff leave their jobs due to a lack of training that allows them to learn new skills and develop their skill set. This shouldn’t be the case, as shoppers expect to be engaged by sales staff who know how to handle the sale of a considered purchase. The sales associate has to understand the importance of the sales process and how to navigate this to meet the customer’s needs and enhance their experience. Without training, who’s to blame when the sale doesn’t get closed or the customer walks out and later orders online? Often I think it’s the retailer for failing to develop the associate’s skill set to identify the need, create a journey that responds to the need and close the sale through an enhanced customer experience which builds on your customer service proposition.

Now more than ever, enhancing the customer experience is critical to create theatre in order to take the consumer through the varied steps of the journey from demo to sale. To do this, the responsibility as the employer is to equip your staff to be the best they can be – and this all starts with training. A key element of success in store, especially for considered purchases,  is the engagement of shoppers with any retail sales advisor [RSA]. Therefore as the employer, are your RSA’s proactive, helpful, skilful, knowledgeable, and capable of providing a personalised experience? This is something the online experience can’t replicate and physical retailers should be capitalising upon and drawing people in-store with the promise of a worthwhile face to face engagement.

The difference is down to individuals, their training and management, all of which are critical when it comes to talking about a brand and its products. It is vital that RSA’s are informed and motivated to deliver an exemplary customer experience through being not only advocates of the brands ranged but also of the store itself.

So what can be implemented at very little expense, apart from time, in order to give staff the opportunity to grow with a view to be successful in their roles and motivated to remain as an employee of your store. Here are five suggestions that you can influence:

1. Ask your suppliers for training support or choose to work with brands that offer recognised training e.g. those who’ve been shortlisted for an ERT training award. Look around your store and identify every brand or category that your staff can’t sell effectively. These are the brands you can lean on for training support.
2. Seek out and invest in training specialists to support your business and develop your staff to be effective in their roles. But first, you need to understand what things are like from the shoppers’ point of view. What is their experience like when they come into your stores and engage with your sales people? Consider commissioning a mystery shopper survey to provide an independent assessment that can be benchmarked against other retailers and indeed your competitors. This will provide you with insight on what behaviours need to be changed and skills improved so that the training can be tailored accordingly.
3. Membership of organisations such as BIRA (British Independent Retailers Association) can offer specialist retail training and bespoke learning – https://bira.co.uk/benefits/retail-training as can seeking out support from your buying groups or trade bodies such as CIH, Retra, Sirius or Cedia to name but a few.
4. Check with your local authorities to see if they offer free specialist training and support to you as an independent retailer in the community. An example – https://www.midsussex.gov.uk/licensing-business/independent-retailers-support-programme-2021-2022/
5. Build and develop a Sales Advisor training program for your store(s) that recognises personal development and rewards individuals for their efforts. This does not necessarily need to be monetary, it could be in the form of certificates and or treats.

To read the full article by Dan Todaro, Managing Director please visit ERT Online