Customers can’t resist a great deal – or can they, if it’s too good to be true? Business News

Findings from a new survey suggest that pursuing received retail wisdom could actually be a risk to your business.

The world of retail in 2023 is saturated with tantalising deals and irresistible discounts. Brands big and small employ discount strategies to attract customers and boost sales. But in the race to offer the most enticing deal, are businesses unintentionally driving potential customers away? A recent survey conducted by Aimondo Pricing Solutions, in collaboration with the market research agency PeopleFish, unveils a rather startling revelation: over-discounting might not be as attractive as many retailers believe.

Context and background

In October 2023, Aimondo conducted a survey of a sample of 500 UK shoppers. Among the insights derived, one caught immediate attention: a significant portion of British shoppers have grown wary of online stores that seemingly offer too-good-to-be-true discounts.

One might imagine that unfamiliar brands offering steep discounts would generate the most scepticism. But, intriguingly, the caution was even more pronounced when recognised brands dangled mammoth discounts. This heightened mistrust from the general populace can perhaps be attributed to a recent online scam which attempted to rip off customers using spoof websites associated with homewares brand Wilko, which had stopped selling online after going into administration.

The perception of discounts

To delve deeper into this psyche, participants were asked: “What’s your first thought when you see an unexpectedly massive discount (like 80-90 per cent) on an unknown store’s website?”

The results were compelling. A significant 61 per cent said they would seek out peer reviews before considering a purchase, and only 7 per cent felt inclined to buy immediately.

When posed the same question but with the context of a well-known store, the dynamics shifted a little, yet remained cautionary. More than half (52 per cent) said they would investigate the authenticity of such a deal, while 15 per cent said they’d go as far as reporting it as a potential scam.

Savvy: Customers may be more skeptical than brands think when it comes to mega-deals

(Courtesy of Aimondo)

Re-evaluating market assumptions

Looking at the Q3 reports released by some major UK retailers in September 2023, it’s clear that many were grappling with revenue drops. The common culprits cited ranged from geopolitical shifts and adaptations to the post-Covid “new normal,” to an assumption of an insatiably deal-hungry customer base.

However, the findings from the Aimondo survey challenge this narrative. While the traditional belief in retail has been that customers are always on the lookout for the next big discount, it appears that excessively hefty deals trigger more alarm bells than shopping impulses.

When making a choice about where to shop, many other considerations come into play for UK shoppers. Notably, our survey pointed out that the most significant factor wasn’t discount-related at all. Instead, aspects such as a store’s return policy and the overall quality of customer service held more weight in their decision-making process.

Further emphasising this point, the survey results indicated that even the allure of a big discount could not override the power of habit. For many shoppers, habitual patronage, or staying loyal to brands they’ve previously shopped with, held more influence than a transient deal. This reiterates a long-held belief in consumer psychology: changing habitual behaviour is always a tall order.

Between the rock and the hard place

These revelations are not just the unintended consequences of over-discounting. What’s even more striking is that many companies are acutely aware of the damage excessive discounts can inflict on their reputation and revenue. Yet, ensnared in the dichotomy of burgeoning stock and dwindling demand, these businesses resort to sweeping discounts, believing it’s their sole lifeline.

This may indicate a missed step in their strategy – perhaps they should have sought feedback directly from their clientele. The survey’s insights could provide a beacon. From its responses, one promising strategy emerges: personalised pricing. Delve into our survey to discover how consumers perceive personalised pricing and how it stacks against other pivotal retail elements like return policies and customer service.

To read the results of Aimondo’s UK customer survey, click here.

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This notice was published: 2023-11-29 16:52:20

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