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How retailers can benefit from the new cost-conscious consumer

How retailers can benefit from the new cost-conscious consumer

By Liane Dietrich, UK Managing Director, LinkShare.

The recession has hit the high street hard. With only a few exceptions, sales are down, resulting in the closure of such well known brands as MFI and Woolworths.

But consumer spending hasn’t stopped. The online market is booming and every day it seems like new figures are released showing that consumers are spending more online. For example, a recent retail report from PayPal showed that online spending in the UK is set to more than double by 2011 and similar levels of growth have also been predicted across much of Europe and the US.

So how can retailers take advantage of the trend? Again, Woolworths is a good example, with its recently relaunched online-only presence. By giving consumers access to the products they want in a format they’re using on a daily basis, it has been given a new lease of life.

But simply having a website can generate only a limited number of sales, and the question has become one of how can brands best promote their website to their target audiences.

The key here is to follow consumer behaviour. Statistically we are doing more online research than ever before making a purchase; we rely on reviews, on recommendations, on the experiences of friends and on brand loyalty.

Our recent online shopping research carried out with analyst house Penn, Schoen & Berland Associates showed that 92 per cent of shoppers now have more confidence in online information about products than advice from store shop sales assistants. We also found that 81 per cent of consumers conducted internet research before buying a product in order to obtain the largest saving possible.

A sound marketing strategy is essential for online success and there are some great success stories out there for retailers looking for guidance or inspiration. We have recently started working with Karen Millen who was looking to refresh its digital marketing strategy and explore new online channels.

Its priority was to gain access to a new group of internet shoppers via a series of other respectable sites who could be directed to the Karen Millen online store. It chose to work with LinkShare to implement an affiliate marketing programme to create a cost-effective and measurable way that would influence shoppers during their online research and decision-making processes.

In the first three months Karen Millen has already seen an increased range of quality customers from other fashion-related websites clicking through to visit, browse and shop online at the store. This demonstrable return on investment makes affiliate marketing a rewarding tool for businesses and one that allows them to target a particular audience in a particular fashion.

Targeting is essential for success. Customers are using a wide variety of online channels to help make their purchasing decisions and a digital strategy must be equally wide-reaching. It’s not enough to post a single banner advertisement on a key site; the days of snap purchases are over, and consumers need more than a single prompt to buy a product.

Instead brands must use the right network of sites to create wider brand awareness and promote key products in multiple locations. As LinkShare retailers like Karen Millen, Lipsy and Oasis have found, this helps create a relationship that will drive traffic to sites and encourage customers to make a purchase once they’re there.

As well as driving traffic to the site, part of the role of an affiliate network is to recommend the best approach for retailers to maximise the spend of shoppers who do follow through. Promotions and special offers will help achieve this, even if for some it’s a postage waiver rather than product discount; the trick is to motivate purchase by demonstrating how the retailer is adding value to their purchase.

The outlook is far from bleak for retailers. The downturn is starting to lift, but even so we are unlikely to see a return to the days of the resilient high street. Consumers will adjust to their new cost-conscious habits, and to insure a successful future brands need to adjust their strategy to take this into account.

Those who implement a smarter, more efficient digital strategy will find themselves ideally placed to profit from the new and improved economic landscape.

A few key points:

1. High street spending is down but consumers are still spending money online – figures are only predicted to continue climbing.

2. People are doing more research before making a purchasing decision – savings, offers and peer recommendations are increasingly important.

3. A sound digital marketing strategy that employs multiple online channels will help to drive traffic to a retailer’s website and maximise customer spend.

4. The outlook is far from bleak – the retail market is evolving, not disappearing. The key is to follow consumer behaviour and offer them the right information in the right places. Retailers who can do so will see their return on investment increase alongside consumer spend.

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