NPD Regular Column Pricing and promotions
T
hese days it seems that there is always a sale on somewhere; you just have to find it. And with the many shopping channels now available to consumers it’s
easier than ever to compare promotions and prices across a variety of retailers. So is this the key driver for toy purchases in 2012? Are we a nation of bargain-hunting, savvy consumers looking around to save as much as possible in these tough times? The truth is somewhere in between. The NPD Group’s Consumer Panel data
for the Toys market confirms that price is indeed the key driver when purchasing toys, but the most intriguing aspect of this is that this has also grown significantly since 2008. Looking at the reasons shoppers give for choosing a toy retailer we can see those related to low prices were the drivers for approximately 40% of occasions in 2008 but in 2011 it accounted for nearer 45%. This rise is taking away from the other key drivers of an enjoyable shopping experience and general convenience. In fact only a quarter of all shoppers stated that the main driver for choosing a retailer was ‘experience’, which includes reasons like the store having a good choice and knowledgeable staff. This data certainly hints at a more price-sensitive shopper who is willing to give up on other retail benefits purely for lower prices. It’s also interesting to note that we have
recently seen an increase in penetration across nearly all toy channels, and this is in a toy market that is not in growth. So how can this be? Well the evidence points to consumers that are shopping around or ‘deal hunting’. With more sales spread around various channels, consumers have realised that they can get certain products cheaper in toy stores, some in grocers and some online. And all it takes these days is a little easy research at home or on your phone! Online has seen the largest increase, and is also the most likely channel to be chosen with price as the key driver. So the evidence so far certainly suggests that price is becoming more important than ever when shopping for toys, and promotions play a big part in consumers
24 Toyworld 2008
Experience 28%
Price/Value 40%
Convenience 32%
The NPD Group’s Rory Partis takes a look at how important pricing and promotions are in the UK toy market.
‘Price’ is the key driver for choosing a retailer…
Convenience Experience
Price/Value Convenient location
Good choice brands Knowledgeable and helpful staff
Good overall value Low prices Special offer/promotion
Experience 26%
Price/Value 45% The NPD Group, Inc. | Proprietary and Confidential Source: NPD Consumer Panel Service
2011
Convenience 29%
1
“With more sales spread around various channels, consumers have realised that they can get certain products cheaper in toy stores, some in grocers and some online.”
finding these low prices. Again, from The NPD Group’s Consumer Panel information, there were around 8m more toy purchases in 2011 that were fully or partly driven by promotions, which is a significant increase. As mentioned earlier, it certainly seems like there is always a sale or promotion on somewhere at any given point in the year, and we now have the ability to compare prices at the click of a button online making it easier to find that bargain. And it seems to be pure price reduction, that is still the most enticing offer to shoppers with store sales and price reduction rather than ‘buy one, get one free’ the growing area for toy purchases. We have also seen this year that the toy
market in the UK is showing a decline (year- to-date November at the time of writing),
though not as bad as some other countries around Europe (see our article in the December issue for an overview of how UK compares to other European countries). This decline has in some cases been attributed to less promotional activity in 2012 than in 2011 and in turn this would suggest that consumers are willing to wait until any promotions start in December to do their Christmas shopping. Some might say it’s a risky strategy to save a few quid, but there you go. It remains to be seen if the weeks before the 25th December will bring the bumper sales that everyone is looking for, but the evidence certainly suggests that UK shoppers are now more than ever looking to sniff out a deal if they can.
% of toy purchasers choosing a retailer for…
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