RESEARCH REVEALS IMPORTANCE OF VALUE, LOYALTY PROGRAMS, AND PROMOTIONS AS RETAILERS CONFRONT POST BUDGET ECONOMIC HEADWINDS

The Government's latest budget is a hammer blow to the retail sector according to OnBuy, with smaller businesses set to pay the heaviest price over the coming months. The leading online marketplace anticipates wage increases and the uptick in employer National Insurance reducing economic headroom for retail businesses across the country, and urges owners to adapt and innovate in order to weather the storm.

Research from the UK’s leading cashback marketplace reveals that consumer priorities are shifting in response to the cost-of-living crisis, with value, loyalty programs, and promotions now essential in driving purchasing decisions. As consumers feel the pinch, their search for value has intensified with over half of shoppers admitting they are on the lookout for bargains and deals, while 60% experience a thrill from discovering a great value purchase. In order to survive in today’s challenging environment, retailers must adapt by offering genuine, consistent value to shoppers in order to capture and retain customers.

With economic pressures only set to intensify, only 7% of respondents said that the cost-of-living crisis had not affected their shopping decisions. With half (47%) of consumers admitting that they are constantly on the lookout for bargains and deals, there is a clear need for retailers to offer competitive prices, promotions and loyalty incentives to capture attention. Over a third of respondents said that frequent promotions make them feel more loyal to a retailer (35%) and like the business is on their side (35%), both of which are vital for retailers as they look to remain front of mind with both existing and prospective customers.

As retailers grapple with tough decisions about how to maintain their margins as the costs of their businesses rise, the research revealed the pivotal role loyalty programs play in customer retention. Over half (56%) of shoppers rank strong loyalty programs as the top reason they stay with a particular retailer, with women (60%) and the over 60s (64%) being especially drawn to these initiatives. More notably, loyalty programs are valued more than consistently low prices (47%), retailer reputation (31%) and even above-and-beyond customer service (24%). These results suggest that, for retailers, investing in loyalty schemes could prove more effective in securing long-term customers than price-cutting alone.

OnBuy CEO and Founder, Cas Paton, commented: “Following the budget, retailers will have to confront some difficult decisions in the months ahead, but they must keep their customers front of mind. We’ve just seen swathes of people voting for their pockets in the US. These people are tired of struggling to make ends meet and these acute financial challenges are being felt here in the UK too.

“Retailers must respond. It’s clear those offering consistent value through robust loyalty programmes and promotions will be better positioned to thrive in this difficult economic environment. Supporting customers is critical to building a robust retail landscape, and is why we have revolutionised cashback rewards in the online marketplace to deliver tangible cumulative value for customers.”

When it comes to influencing shopping decisions, promotional offers, loyalty points and cash back incentives (37%) have a more substantial impact on shopping habits than other factors like seasonal needs (20%), trends (12%) and social media recommendations (20%). OnBuy’s research also found that value through promotions resonated particularly well with older British consumers, as 48% of shoppers over 60 are most driven by discounts.  Especially for older consumers, discounts play a decisive role in purchasing choices, and with budget constraints likely to tighten further, retailers must offer meaningful promotions consistently, rather than focusing on isolated sale drivers such as Black Friday and Cyber Monday.

“The landscape is evolving all the time. There’s no time to stand still and retailers must use all the data available to them to fine tune their offers to ensure they’re resonating with their customers in a retail environment that will be more competitive than ever before,” Paton added.