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Keep Your Customers


When it comes to incentivizing customers to visit stores, less may be more, according to a September 2008

The study found that nearly half of all customers (48%) are “much more likely” compared to a year ago to shop at a store that waives the sales tax, generally a single-digit savings. By comparison, a retailer that offers storewide sales of 33% or more off regular prices garnered just 44% support, while stores that increased their selection of private-label products received the lowest support from consumers, just 16%.

The Chain Store Age/Shapiro study of New Age Buying Incentives examined 21 different incentives. They included promises of savings and service. In the difficult economic environment that consumers must now negotiate, nearly half say they are managing their household budget mainly by buying less; almost as many say they are doing so mainly by taking advantage of money-saving opportunities.

The findings of this study demonstrate what is now at stake in retail promotional programs and, more importantly, can assist retailers in designing programs that are likely to achieve a competitive edge.

The three most powerful incentives were suspension of sales tax, store-wide sales of 33% or more, and the opportunity to buy overstocks or irregulars at a low price. Aside from an indifference to more private-label products, other relatively weak incentives were trading stamps (and, by implication, point systems on travel or merchandise), e-mail coupons (as contrasted to pre-printed coupons) and a 3% discount for using a store’s charge card, implying that incentives to use credit are being resisted.

Big-ticket purchases were studied separately. Of six incentives studied, free installation was the strongest draw, at 53%. Four others had somewhat lower appeal. Among them, free delivery was strongest, followed by manufacturer rebates offered on many of the products the store sells. Interest-free financing was weaker, suggesting again that even for big-ticket items, consumers are reluctant about incurring debt.

The audience for retail advertising has surged over the past year. Consumers are depending on advertising to inform their more cautious shopping. In particular, attention to newspaper retail advertising has grown. Growth in coupon redemption is being supported by hard-copy coupons derived from newspapers as well as by direct mail.

While year-to-year growth in attention to e-mails from retailers is relatively modest, the use of retail Web sites is growing at a robust pace.

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