For some customers, good value equates to low cost, hence the initial success of discount supermarkets Aldi and Lidl. For others, it is about choosing retailers that provide a comfortable in-store experience, coupled with reliable customer service, while yet others have spent more time shopping online, using the web to compare prices and find discounts.
The past two years have undoubtedly been a night-mare for some retailers, with Woolworths the biggest name to vanish from the high street, but for some it has been a boon. Sainsbury's, for example, has positioned itself as a store offering quality food at a fair price, through initiatives such as its lauded 'Feed your family for a fiver' promotion.
With these issues in mind, Marketing joined forces with Yahoo! for the second in a series of round table discussions. We invited a premium selection of retail marketers and experts to join us at the historic Liberty department store, in the heart of London's West End.
Our panel agreed that the recession has made people take greater control when shopping. Gwyn Burr, customer director at Sainsbury's, says consumers are becoming more savvy, actively seeking out bargains.
'We have a proposition of universal customer appeal. Our own-brand, which is brand quality but 20% cheaper, has seen enormous growth as consumers try to recession-proof their basket,' she adds. 'It doesn't matter how good your marketing is, and it doesn't matter how good your branding is; they either see the value in their basket or they don't.'
Burr reveals that three-quarters of Sainsbury's customers buy both Basics and Taste the Difference products in the same shopping trip, demonstrating that they want low prices on some products and to treat themselves with others. Sainsbury's has also posted a 300% growth in sales of higher-welfare chickens. 'Customers want value and values,' she says.
In line with this growing concern with value, consumers are increasingly researching products online before purchasing. Nigel Robinson, managing partner and head of new business and marketing at MediaCom, says: 'Retailers need to enable consumers to travel seamlessly from online to offline stores.'
Craig Mawdsley, joint head of planning at ad agency Abbott Mead Vickers BBDO, claims consumers are not going out to the high street because they fear they will yield to temptation. However, he adds that they are more willing to be tempted by supermarket clothing ranges.
He explains: 'If a retailer at a brand level can put forward a really convincing value equation, and get the customer into a safe place about what that brand is delivering for them, then suddenly you can unlock some of that discretionary purchase. 'If you demonstrate to customers that you are working hard to earn their custom, it stops them from moving away.'
Melissa Littler, marketing director at online fashion retailer Brand Alley, believes that consumer priority when clothes shopping is 'cost per wear'. This, she argues, is the appeal of discount designer fashion, as it is perceived as providing 'value that will last'.
MediaCom's Robinson contends that although people are thinking carefully before purchasing, 'they will invest in something if it's good value - even if it's quite a high-ticket item'.
He notes that Sky subscriptions have stayed solid, despite fears that people would cut back on what some would consider a luxury. This is because consumers are prepared to invest in brands that help them enjoy a good night in.
Craig Inglis, head of brand communications at John Lewis, says his customers have been unaffected by the downturn. 'They don't really know what the recession is,' he adds. 'They feel it is a media invention.' He points out that sales of premium beauty products have 'gone through the roof' as women treat themselves to products that make them feel good.
Nicola Ibberson, retail category director at Yahoo!, echoes this. 'Despite the downturn some consumers are better off, and they want to maintain their lifestyle,' she says.
For some shoppers, the in-store experience and service still plays the most influential role when choosing a retailer. Our panellists have contrasting views on this.
Jamie Davis, creative director at Mood Media, a company that looks into how brands can appeal to consumers' senses, says retailers ignore the in-store experience at their peril. 'Everyone seems to be looking for that point of difference,' he adds. 'It is about finding something extra to give your customers. Clients have been coming to us and asking for extra things they can do in store and online.'
Amanda Langford, director of strategy at point-of-sale and field marketing specialist CJ Services, echoes this. 'You can't just keep harping on about value of values,' she argues. 'There needs to be a stronger message going out to customers around service, the store environment and the staff on the shop floor.'
Mystery-shopping specialist Retail Eyes is on the front line of the debate over how much time and money retailers should invest in customer service. Simon Boydell, marketing manager, agrees with Davies and Langford that training and customer service are paramount.
'Customers are looking for the whole experience' he says. 'Your interaction with the staff ultimately plays a large part in how you talk to your friends and family about that brand.'
However, Ali Jones, marketing director at Debenhams, warns that retailers cannot afford to dwell on service when emphasis on the bottom line is so great.'The number one reason customers shop with you is your product,' she says. 'You can get caught up in lots of service elements that don't add much to the bottom line.'
Scott Jefferson, marketing director of Greggs, agrees. 'Product is king. In a recession, I would probably put price ahead of service.'
However, the product being purchased tends to dictate the level of service required. For example, Inglis notes that people need extra confidence when buying electrical goods.'Service has become more important for us,' he says. 'It is very clear from our customers that they value that as part of the overall equation. As a department store, there are lots of our products that other people sell. The thing that differentiates us is our service.'
Robinson says service levels are dependent on the retailer culture, and whether employees subscribe to the company's ethos and goals.
Sainsbury's invests heavily in mystery shopping in order to get customer service right, according to Burr. 'You don't paint on a smile and go out and try to provide great service,' she says. 'There is a massive leadership role in getting service right. Colleagues will do a great job if they trust in the brand.'
The panellists felt that retailers need to keep experimenting in the online space. MediaCom's Robinson points to the example of IKEA, which has successfully expanded its geographical footprint through its website.
Discount fashion site Brand Alley is another example of a successful online-only retailer making the most of the digital arena.
The growth of ecommerce has also placed more pressure on customer service. 'The internet must have raised the stakes in terms of customer service, as there is the option not to go to the store at all,' says Guy Beresiner, head of commercial development at Yahoo! 'Isn't service more important than product, as service brings customers into the high street?'
Inglis reiterates that consumer confidence is the key. 'If customer confidence in the product is high, chances are that you will buy it online. When confidence is a bit lower, consumers want to touch it and feel it, so service becomes more important. Our customers are using both channels, with no particular set pattern.'
John Lewis also uses partner-assisted transactions, where a member of staff takes a shopper to an in-store computer kiosk to help them order online. It is also using videos to bring its expertise in customer service to life online.
Burr says a website must carry through the message that a retailer uses on the high street. 'For us, it is about the ease of convenience online,' she adds. 'It is about understanding the pressures that people have in life and making sure it is a very good and efficient service. There is a structured experience that customers expect. Expectations are based on their experiences of the bricks and mortar.'
The words used throughout the discussion to describe the retail industry are familiar: price, value and service. However, our panel-lists feel that successful retailing is a fine balance of knowing when and where to use these tools. It is about recognising who your target consumer is, how they want to interact with you, and accommodating their needs better than your rivals.
The retailers that are succeeding are those that have confidence in their brand proposition. Confidence within a company creates confidence in its staff, and, ultimately, its customers.
Around the table:
Richard Abbott, deputy editor, Marketing
Guy Beresiner, head of commercial development, Yahoo!
Simon Boydell, marketing manager, Retail Eyes
Gwyn Burr, customer director, Sainsbury's
Jamie Davis creative director, Mood Media
Nicola Ibberson, retail category director, Yahoo!
Craig Inglis, head of brand communications, John Lewis
Scott Jefferson, marketing director, Greggs
Ali Jones, marketing director, Debenhams
Amanda Langford, director of strategy, CJ Services
Melissa Littler marketing director, Brand Alley
Caroline Marshall, executive editor, Haymarket Brand Media
Craig Mawdsley, joint head of planning, Abbott Mead Vickers BBDO
Nigel Robinson, managing partner, head of new business and marketing, MediaCom
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