New Year Brings Price Wars
There's been a great deal of talk about the resurgence of consumer spending, and for good reason. Many retailers went on record to declare this past holiday season the best ever. That doesn't happen unless individuals are feeling more comfortable about their income prospects in 2011.
Having said that, I'd advise marketers to take a deep breath before declaring the good times are back. A soft job market combined with the inability for buyers to access credit means that consumers, while spending more, will still look hard for good bargains before shelling out greenbacks. This is even true for the younger generation that historically has had more disposable income.
A recent Chase Slate/U.S. News survey noted that 18-year-old to 34-year-olds are more committed to saving money and decreasing spending this year than those in any other age group. Make no mistake, 2011 will remain a challenging one for retailers and product marketers.
What Buyers Seek
Plan on seeing smarter buyers than ever before. Thanks to continual access to competitive data, more intelligent buyers will come into your store or log on to your website. They'll do so armed with pricing and availability of rival products and services. They'll even go as far as to walk into your store, take a picture of a particular product on your shelf using Goggles mobile search app, then find a better price and purchase it online — all before walking out your front door. What's more, high-tech gadgets won't be the only items impacted. Virtually every product or service will see increased pressures on price and availability. The bottom line is that consumers are looking for the best bargains. As a result, price wars will ignite.
Case in point: The college textbook marketplace has turned upside down in a matter of months. Such offerings used to be only available at the university bookstore, where schools and publishers could command high prices and profits by mandating their products be used for certain classes. Students and parents were forced to spend nearly as much on textbooks as they were for tuition in some cases.