The rise and power of the smart shopper

2011-10-15 08:23

Dion Chang

Back in 1985, British soul band Simply Red had a hit single – Money’s too tight to mention, and the opening lyrics went like this:
I been laid off from work

My rent is due
My kids all need
Brand new shoes
So I went to the bank
To see what they could do
They said son – looks like bad luck
Got-a hold on you
Money’s too tight to mention
I can’t get an un-em-ploy- ment ex-ten-sion
Money’s too tight to mention

Fast forward to this year and the lyrics cut even closer to the bone as the world’s economy teeters on the brink of a
double-dip recession. But even

if we avoid a double-dip, it’s no news to anyone that “money really is too tight to mention”. For the mass middle-class disposable income has all but evaporated with the rising cost of living coupled with an economic downturn.

And if the middle-class feels squeezed, just spare a thought for lower income earners. Just last week, the Wall Street Journal reported that retailers were bracing themselves for a not-so-cheerful festive season.

The frugal shopper, who emerged out of the 2008 financial crisis, was not so much a passing fad, but a very entrenched persona that is here to stay. The article profiled this frugal shopper as: “Buffeted by high unemployment, heavy debt loads, falling home values, high food and petrol prices, these shoppers have been whipped into a permanent state of consumer caution. They buy only what they need, avoid premium labels, clip coupons and scour sales.”

The article went on to quote Chris Christopher, senior economist at IHS Global Insight (provider of market intelligence, economic and financial analysis), who described frugal shoppers as “fragile, fatigued and fed up” due to wage stagnation, food inflation and high petrol prices. Sound familiar?

What is even more worrying for retailers is the fact that the frugal shoppers who traded down during the 2008 recession don’t seem to be bouncing back to their old spending habits or even their old shopping environments. Much like the Great Depression in 1929, this protracted economic downturn is spawning a new breed of “forever frugal” consumers.

But there is one big difference: technology. It has turned the frugal shopper into the “smart shopper” who uses a stealthy combination of smart phone, social media and group buying.

One of the most innovative schemes on my radar actually enables the shopper to reduce the price of goods in a supermarket via group check-ins on Facebook. The sidebar explains the process but in essence the concept is based on a combination of group buying with location-based technology.

With group buying, a retailer is able to sell a product at a discounted rate provided there is a guaranteed number of buyers. Location-based technology takes this one step further and allows the consumer to zone in on a particular shop.

ICA, one of Europe’s top retail companies, is already using this technology at a supermarket in Stockholm, Sweden. Their customers are able to collectively reduce the price on an item by “checking in” at the store on their GPS-enabled phones.

And if you think it’s an advanced technology that will never arrive in SA, think again – it’s already here. As its first launch into an emerging market, Facebook Check-in Deals has partnered with three major brands in SA: Chevrolet, Cell C and Avis.

These launch partners, however, only have the exclusive rights to use this concept until next month, when the concept will be thrown open to other businesses.

So while retailers and frugal shoppers may feel the immediate future looks bleak, collaborative efforts fused with new technologies can be the solution to this economic downturn.

With a bit of technological suss and non-traditional marketing, retailers can now lure the frugal smart shopper. You just need to know which buttons to push.

Chang is the founder of Flux Trends:

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