Times are tough, but shoppers are as impulsive as ever

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2 Welcome to another edition of Windows - a series of reports from shopper research specialists Shoppercentric. In each issue we research a hot topic of relevance to retailers and manufacturers and analyse the issues involved. This report is designed to give you some of the overall themes and insights from our study. If you would like further information please impulserevisited@shoppercentric.com 2 Windows 11

3 Times are tough, but shoppers are as impulsive as ever The impact of the promotions war Women are still women and youth is still impetuous Never underestimate shoppers

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5 Early in 2008 our first Windows report focused on defining impulse and understanding its role in shopping behaviour across a breadth of categories both fmcg and non-fmcg. This report challenged the traditional approach to marketing for impulse taken by the industry, which continues even now to define impulse within the confines of channel or category silos. Our research proved irrevocably that impulse is a behaviour not a channel or category. A lot has changed since that report not least the pressures shoppers, retailers and manufacturers are facing as a result of the continuing economic downturn. So now seemed a good time to return to this subject, and see if impulsive shopping habits have changed, and to explore what that means for industry. Our report is based on 1047 online interviews amongst UK adults (16+), with nationally representative quotas.

6 ou might have thought that in these times of austerity shoppers would be looking to avoid impulsive behaviour as much as possible. You would be wrong! Shoppers e just as impulsive as ever. In fact, not only has the amount of shoppers who buy impulsively remained relatively unchanged in recent years, those of us shopping impulsively are doing so in more categories. The number of grocery categories that a shopper buys from impulsively has increased by a third since And it seems that even now shoppers can be impulsive when buying high cost items such as MP3 players, computers or even cookers.

7 Yet scratch beneath that surface to find out how shoppers think they behave, and it s almost as if they are in denial: just 21 percent of shoppers claim to buy more impulsively now vs 27 percent in If ever you thought understanding shoppers was an easy business, now is the time to change that opinion. What do these mixed messages mean? Well, it s all about the context. We are all under increasing pressure these days: prices are increasing; inflation is on the rise; pay rises can t be assumed; jobs are still under threat in some areas; and spending is a struggle for many shoppers just as it is for the government. In these circumstances it s no great surprise that shoppers are adopting a cautious attitude. And yet impulsive spending does not mean frivolous spending not now.

8 It might well have done in the recent past when we all had relatively more money than sense. But there s nothing like a recession to shake us up, and that seems to be exactly what is happening here. Whilst our research results in 2008 challenged the industry definition of impulse as a channel or category, these latest findings challenge our perception of an impulse purchase as an indulgence. Shoppers are proving once again that they adapt with the times a lot quicker than business adapts its thinking. Impulse purchasing is no longer primarily about self-indulgent or carefree spending. It can also be about opportunism: seeing a product at a good price; spotting a bargain that genuinely saves money. These are the factors that drive impulse whilst allowing shoppers to feel they are in real control of their spending during difficult times. Impulse behaviour is holding up during the economic crisis because it is now the mark of a smart and savvy shopper, rather than of someone with too much money!

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10 ou must have seen how many promotions there are in supermarkets these days unless you ve been too engrossed in your work to visit a store recently. Here are some stats in case you need convincing that there is a promotions war going on: 39 percent of FMCG sales by value were sold on offer vs 34 percent last year (Nielsen Scantrack, February 2011) The total number of promotions in-store is up 2.6 percent year on year (The Grocer, 12th February 2011) Sainsbury s had 2116 offers in-store for the 4 weeks to 17th April 2011 (Assosia) Yes, we know promotions have always been around. But even shoppers are commenting on the sheer amount of promotions. Stores are full of them, to the extent that supermarkets are in danger of becoming drowned by promotional materials. % Mentioning as impulse trigger Grocery Promotions are currently the favoured mechanic for retailers and brands wanting to demonstrate that they are offering shoppers value.

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12 s every man will tell you, women are frivolous shoppers. Well, frivolous might be a bit harsh, but it does seem that women continue to be the more impulsive shoppers. % Penetration of impulse purchasing among all shoppers By Gender 2011 And this is despite the fact women are more likely to make changes to their spending to cope with the economic situation (one in three women are making major changes to household spending because of the economic crisis compared to one in four men). So whilst men may continue to see women as frivolous, there is an argument that women are getting smarter about their shopping, and using their beady eyes to spot and pounce on a real bargain when they see it. This means women are now shopping more impulsively because of the economic situation!

13 But women haven t completely changed their spots. They still love shopping for the sake of shopping. It is becoming more of a pastime than ever with 39 percent in 2011 agreeing that shopping is a fun way of using up time in the day compared to 29 percent in And whilst on the subject of stereotypes we can confirm that year old shoppers are as impetuous as ever, with 45 percent agreeing that they are buying things more impulsively now vs 21 percent for the total sample. They are also the most impulsive age group when buying Mid Cost or High Cost items. What s more, 60 percent of them agree that shopping gets them out of the house, compared to 46 percent among the total sample. It seems they are coping admirably with the pressures they are under. Their job prospects might be troublesome in the current labour market, but they are not letting it stop them from making the most of what they have, and what the retailers and manufacturers are offering them.

14 f there s a conclusion to this report, then it is that as an industry we are all too ready to underestimate shoppers. Brands try to cram more products on shelf in the belief shoppers want even more choice. Retailers and brands pepper the stores with promotions some of which aren t a bargain at all. And retailers think shoppers don t notice when standards slip a bit. Yet shoppers have been in the driving seat of change throughout the economic crisis from credit crunch, through recession, to the age of austerity. They have become smart, savvy shoppers who can see through half-hearted marketing initiatives; they have shown they are willing to play channels and retailers off against each other; and they have learnt a new prudence to deal with the pressures they are facing.

15 The challenges that businesses face because of the economic situation mean that changing shopper behaviour is an increasing focus of activity. To do this, however, means getting out of the office and getting among shoppers in-store. It is there that you will really understand the opportunities that exist, and how to utilise those opportunities to the benefit of your brand retailer or manufacturer.

16 Our series of Windows reports is a small part of the research service we provide to clients. If you would like to know more about how we can help your business better understand shoppers attitudes, needs and behaviours please contact us. CONTACT Please call us: +44 (0) impulserevisited@shoppercentric.com or visit our website at: