A recent study by impact.com, a company that helps brands work together, dives deep into these fascinating changes in consumer behavior during 2023. This information is like a treasure map for businesses navigating the retail world of 2024. Today, we’re exploring the rise of the “savvy shopper” and the surprising hero of the shopping world: retail partnerships.
Savvy Shoppers to Save Big and the Rise of Retail Partnerships in 2024
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- Shoppers are becoming more strategic, focusing on essentials, waiting for sales, and embracing affordable options to stretch their budgets.
- Collaborations between brands drive sales and reach new customers, especially when offering higher commission rates to partners.
- Successful partnerships require choosing the right partners, clear communication, and focusing on creating value for brands and customers.
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The Savvy Shopper on the Rise: Fewer Trips, Smarter Spending
Remember those days of aimlessly browsing stores, filling your cart with impulse buys? Forget it! Rising prices have forced a shift in shopping habits. Shoppers are making fewer trips to the store, focusing on buying essentials like groceries and gas. But hold on, this doesn’t mean they’ve stopped spending altogether! They’ve become more competent with their money.
Strategic Savings
Consumers await sales and discounts, especially during major holidays like Mother’s Day and Cyber Week. The study reveals a surprising statistic: a whopping third of all purchases in 2023 happened in the last quarter (Q4) of the year! This highlights a focus on maximizing value during peak sales seasons.
Key holidays like Mother’s Day, Memorial Day, and Cyber Week saw consumers waiting for the best deals. About a third of all 2023 transactions occurred in the last quarter, which highlights the importance of strategic timing for sales events.
Embrace Affordable Brands
Tight budgets are leading shoppers to explore more affordable options. The study found that one in four people are switching to cheaper brands, while half opt for bulk purchases to stretch their budgets further.
Many shoppers sought ways to cut costs, with one in four switching to lower-priced brands and one in two buying in bulk to save money. These strategies helped stabilize AOV (average order value), even during Q4’s heavy sales season, when significant discounts were offered to motivate purchases.
Goodbye Window Shopping, Hello Wish Lists
Gone are the days of mindlessly browsing aisles. Today’s shopper is all about intention. They click less on online ads but have a higher conversion rate (meaning they buy something). This suggests they’re going straight for what they need or have already added to their coveted “wish lists.” This is where retail partnerships come into play.
By partnering with trusted brands, companies can introduce new products to potential customers and help them curate their wish lists before big sales hit. Imagine your favorite fitness influencer recommending a new pair of workout shoes – it instantly becomes an item you want to add to your list, ready to snag at a discount. Come to Cyber Week!
Intentional Buying
Consumer behavior in 2023 showed a clear shift towards intentional buying. Despite a 29% decline in clicks, conversion rates rose by 32%, indicating consumers were more focused and purposeful with their purchases.
Sale events around Mother’s Day, Father’s Day, and Easter experienced fewer clicks but higher conversion rates, suggesting consumers made more planned purchases than impulsive ones.
For instance, April to May had similar conversion rates to what we’ve seen over the November holiday period of 2023. In April, conversion rates increased by over 100% compared to April 2022 and by 66% in May compared to May 2022.
Inflation Drives Up Cart Values
Despite budget-conscious behaviors, the average order value (AOV) rose. The modest 2% yearly increase in AOV likely reflects price inflation rather than an increase in the number of items bought. Categories such as health and beauty saw a 13% drop in consumer spending but a 19% increase in AOV, indicating that higher prices drove up each purchase’s value.
Cost-Cutting Strategies
Many shoppers sought ways to cut costs, with one in four switching to lower-priced brands and one in two buying in bulk. These strategies helped stabilize AOV, even during Q4’s heavy sales season, where significant discounts were offered to motivate purchases.
In particular, the arts and entertainment category saw unprecedented AOV levels, with an 89% year-over-year increase in October and a 29% increase for the year, driven by strategic partnerships.
Strategic Splurging Gives Consumers Access to Luxuries
Rising prices didn’t stop 40% of shoppers from intending to splurge on selective purchases, such as high-end grocery items or travel. While overall consumer spending dropped 5% year-over-year, some categories saw unexpected boosts in expenditures.
For instance, consumer spending on arts and entertainment rose 36%, while home, garden, sports, outdoor and fitness brands all saw a 6% increase. These trends suggest that strategic spending throughout the year allowed consumers to splurge on nonessentials when opportunities and offers arose.
End-of-Year Splurges
Q4 saw significant conversion rate increases in these categories, indicating that brands should consider offering significant discounts yearly to inspire nonessential purchases and boost annual revenue. These brands also saw unprecedented conversion rate increases in Q4. This demonstrates how strategic spending throughout the year allowed shoppers to splurge on nonessentials when they saw the right opportunity and offer.
The Power of Partnerships: Why Collaboration is Key in 2024
Here’s where things get exciting! With careful planning and strategic collaborations, brands can reach new customers and boost sales in 2024. The study reveals a key takeaway: Partnerships Drive Sales.
Advertising spending mainly remained consistent, but brands that offered higher commission rates to their partners (influencers or other brands they collaborate with) saw a positive return on investment. This means that partnerships can be a cost-effective way to reach more people and drive sales.
Stores are teaming up with other stores or famous people you trust, like makeup stars! This way, the stores can show their products to more people, and you’re more likely to try them because you already trust the other person involved. It’s like a win-win for everyone: stores get new customers, and you might find cool new things you love!
Building Trust and Value through Partnerships
Building trust and value with partnerships is like making a new friend! Here’s how stores do it:
- Finding the Best Friend
Not just any store will do! They need to pick a trusted partner who likes the same things as their customers. Think of it as an eco-friendly cleaning supply store teaming up with someone who cares about the environment, too. This way, you can trust the store and its partner.
- Honesty is Key
Like friends, they need to be honest with each other. They discuss their goals and how they’ll share the success. This keeps things clear and avoids any confusion.
- Win-Win for All
The best partnerships are like birthday parties – everyone gets a present! Stores want to offer deals that make you happy, and partners want to help you find cool things you love. Imagine a phone company working with a music app to give you a discount on both! It’s a great deal for you, and both companies get new customers. Happy shopping!
Embracing Innovation and Personalization
The retail industry constantly evolves, and brands must embrace innovation and personalization to stay ahead.
Rise of “Buy Now, Pay Later” Options
The study reveals a 42% increase in “Buy Now, Pay Later” usage in 2023, suggesting that flexible payment options may encourage more discretionary spending as inflation stabilizes. Brands that offer such options can attract budget-conscious consumers who want to manage their finances while still making purchases.
Personalization and Customer Experience
With so many choices available, shoppers crave a personalized experience. Brands that invest in personalized marketing campaigns and offer seamless shopping experiences will likely win consumers’ hearts (and wallets).
Imagine a shoe store that remembers your size and shopping preferences and recommends new products you might be interested in. This personalization can make shoppers feel valued and encourage them to return for more.
Conclusion
So, stores are getting smarter too, figuring out how to work together to offer you more choices and better deals. Imagine finding your favorite workout clothes on sale, recommended by your favorite fitness influencer – that’s the power of partnerships!
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