Helping Customers Trade Up Not Down

According to Retailing Today, a survey by AlixPartners of more than 7,400 consumers, shoppers are keeping low cost in mind when making purchasing decisions. The survey found that pricing is now important to consumers at all income levels, and all were likely to shift "one level down" in terms of the type of stores they shop, with aspirational high-end retail shoppers shifting down to department stores, department store shoppers now buying at mass-market stores and so on.

I have a bit of trouble with the "all were likely to shift" comment since it makes it sound like customers are all engaged in some sort of mass exodus.  But there is no doubt that some customers may have to trade down and others are at least considering trading down.

Does this mean that every retailer needs to drop their prices or risk losing their customers?  Of course not. What it does mean that our employees must be able to articulate the value of our products to our customers so they don't consider trading down. It also means that we do need to price products with a sharp pencil. 

Consider focusing on attributes like durability and versatility.  This is usually a secondary consideration for customers but could now be a key driver in their decision process. When showing a woman a piece of jewelry a retailer might point out that the piece can be worn with both casual and formal attire.  Or if a retailer is showing a jacket or a handbag they might point out that many customers continue to enjoy their jacket or handbag for many years.

Help your customer picture the use and pleasure the product will bring them. I believe many customers trade down because some retailers are treating the products like a commodity. Treat every product and every purchase like something special - because it is.  For example, if a woman is looking at a silk dress you could find out where she's planning to wear it and talk with her about the place or event.  This is the hardest value to articulate to the customer but also the most effective.

Get the product in the customer's hands and demonstrate its value. Open up that luggage and have them unzip some special compartment.  Get the phone in their hand and have them call someone.  Have the customer open and close those premium pruning shears, just watch your hair!  I bring this up time and time again because time and time again I see people miss this chance to demonstrate a product's value and transfer ownership.

Though some customers might trade down, continue to show the customer the best product that meets their needs first.  While a retailer might be tempted to show their lowest priced product first, that's really unfair to the customer.  Always lead with the best and, based on the customer's reaction, you can move to a less expensive product if it's appropriate.

Remember that if a few of your customers trade down, so are some other retailer's customers as well. So make sure you continue to deliver the best experience all customers will receive that day.  No matter what, customers will always want to do business with a retailer that respects them, appreciates them, and makes them feel good. Add a great value on top of those things and you, my friend, just made a sale.

Comments

[Sandra]

I really appreciated this post becasue it was one of the first I have seen on the current state of the economy that was positive and encouraging. I agree with your point of view that consumers will "always want to do business with retailers respects them, appreciates them, and makes them feel good."

I recently wrote on this subject in my blog on the Gift & Home channel and posed questions about the economy and this "trading down" concept we have all heard so much about. Thanks again for your post and the great suggestions on how to help our customers trade up, not down!

[Doug]

Thanks for your thoughts Sandra. I do think we retailers need to be optimistic but at the same time realistic. The best way to handle any challenge is head on....and for us that means maximizing every customer opportunity.