Hitting commercial objectives in retail has never been easy and there’s no doubt that it’s harder right now. According to global retail analysts GfK in its State of Consumer Technology report, only 20% of consumers consider it is a good time to make a purchase; almost half (43%) believe it’s better to wait.

Globally, there are tough times across all market segments and the ‘non-essential’ or big-ticket items in the Slow Moving Consumer Goods segment face some particular challenges. The total sales value of consumer technology declined 5.5% in the first half of last year, compared to the same period in 2021[1], sowing the seeds for a downward trend that has maintained since then. Likewise, industry analysts Gartner said worldwide PC shipments declined 28.5% in Q4 2022, its steepest decline since Gartner began tracking the market in the mid-1990s[2].

Despite some recent glimmers of hope that show UK and EU consumer confidence is improving, though US confidence fell again in recent months, many retailers are gloomy about their prospects. However, the bottom line is that though confidence is low, consumers are still willing to invest in products and brands and retailers must learn to navigate this landscape through relevant sales strategies.

There are three main business pressures facing them:

  • Bigger drop in demand than expected
  • Unrealistic expectations to perform in comparison to the post-Covid boom
  • Stock and Inventory build-out in the channel while corporate HQ Is considering new / adjusted products to launch to the market to respond to change in demand.

The danger is that as demand drops it can be tempting to resort to fire sale discounts and huge price drops. Brand managers and retailers must resist. Consumers often don’t realize the magnitude of the price cut or they don’t even notice the reduction at all. What’s more, price drops risk squeezing margins even further as inflation pushes costs up from manufacturing and throughout the supply-chain. In this sense, fire sales are a race to the bottom, often sparking a price war, with a consequential and unsustainable impact on revenues and profitability.

Instead, sales and marketing teams within brands and retailers need to look at the mix of levers they can pull to get customer attention, stimulate interest and desire, and lead the customer to take action and purchase. The successful brands will be the ones that take a consumer-centric approach to the value they offer. The message is simple: if consumers are going to spend, give them reasons to spend with you.

Retailers can drive demand by focusing on affordability solutions, such as trade-in of old devices to reduce upgrade costs, bundling accessories, or offering rewards which help towards food, fuel and energy bills or even holidays, gift cards or cashback.  And they can provide greater reassurance to customers with solutions that don’t impact on margins, such as reliability promotions, warranty upgrades and satisfaction guarantees, which can all drive differentiation and offer peace of mind to customers.

  • Cashback promotions highlight the discount, not the reduced price point, creating an irresistible promotional prospect for customers: a specially reduced and time-limited deal, which motivates purchases and delivers a substantial increase in product sales over the longer term.
  • Gift with purchases and bundles are a great mechanic in a challenging economy to drive down stocks and uplift sales.
  • Buy and try promotions reassure potential buyers that the risk of purchasing is reduced by giving consumers a risk-free, no-obligation trial period. It is proven to drive action and increase average unit prices.
  • Trade-ins incentivise customers to upgrade their old equipment via a conditional, time-limited reward in cash or as a gift.
  • When bought with… promotions give consumers a credible percentage discount at the point of purchase to drive uplift in sales of accessories, increase the total order value and inventory turnover.

Getting the right approach to incentives is a careful mix of art and science. There has never been a single lever. One incentive-based sales campaign might be part of the long-term strategy, and another might be set up, managed and closed over a short period to take advantage of an unexpected opportunity.

The major benefits of these promotions during a downturn are that they can generate demand and trigger customers into action. More than that, they enable you to be relevant to customers right here and now and show that you understand why they might otherwise delay a purchase.

If we have learned anything from previous recessions, it’s that over-relying on price discounts is a one-way street to lower margins and brand perception. There may need to be changes to the product mix or prioritising different audiences to protect margins, but by pulling these promotional levers we can reassure customers, demonstrate added-value and stimulate demand. All of which puts brands and retailers in a much better position to outperform against market expectations and emerge stronger as the economy recovers.

[1] Source GfK State of Consumer Technology and Durables report (November 2022)

[2] Source Gartner PC Quarterly Statistics Worldwide by Region (January 2023)