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Retailers Are Rethinking Their Pricing and Marketing Strategies

Our Most Compelling Data:

64%

of retail leaders said they plan to increase their prices over the next 12 months, and 20% said those price increases will be significant.

71%

of retail leaders said they’ve increased their total marketing as a result of inflation, wage, or price pressure.

Consumers are closing their wallets as retailers hike prices. Retailers must get creative to solve the issue.

Retailers and consumers have reached an impasse – or at least that’s what they’re telling us.

Fifty-eight percent of consumers said they’ve cut spending on retail purchases over the last 12 months. At the same time, 30% of retailers told us they’ve increased prices over the last 12 months and 64% said they plan to boost prices over the next year.

While the Consumer Price Index in Australia is trending back toward historically normal levels at the end of 2024, retailers will still have to come to the table with more creative ways to boost – or even maintain – revenue in 2025. But it’s not like they haven’t been trying: 71% of retail leaders told us they’ve already increased their marketing and promotional efforts as a result of inflation, wage or price pressures.

One path more retailers may follow to provide wallet relief is offering buy now, pay later (BNPL) at checkout. Seventy-three percent of the retail leaders we surveyed whose stores offer BNPL have seen an increase in BNPL purchases over the last 12 months. That shows consumers are getting more comfortable using instalment payment plans rather than paying for purchases in full or via credit cards that charge interest for rolling balances.

Key takeaway:

Creativity can’t just be reserved for coming up with new products. Whether it’s offering alternative payments like BNPL, experimenting with loss-leader strategies (advertising a heavily discounted item to customers who’ll likely buy additional items once they’re at your store), or finding a way to be part of the one-third of retailers who’ll hold off on cutting prices in 2025, consumers are watching to see which retailers want to win their wallets back.

To take this a step further – and away from purely financial goals – think about how pulling some of these levers over the long term could position your brand as more loveable and create brand loyalists. Digging into your data to see what past moves led to greater ROI or more foot traffic from your local community could help you identify a tactic that makes your core customers happy year-round and boosts your top-line revenue.

Pro tip:

Consider researching and adding a buy now, pay later service like Afterpay to your business’s payment options. BNPL was the checkout counter star at the start of the 2023 holiday shopping season. BNPL transactions through Afterpay were up 24% over the Black Friday and Cyber Monday weekend.

Sixty-three percent of consumers still want to hear from businesses via email, even above social media

The fastest way to consumer dollars is through direct conversation. And according to consumers, there are fewer ways more tried-and-true than email, a technology invented in 1971.

Email is still the preferred way consumers want to be reached by brands (63%), though text messaging is gaining some ground at 44% (up from 32% when we asked in last year’s report). Both mediums underscore what longtime retail marketers know to be true: Consumers crave one-on-one interactions, which can also go a long way in building brand loyalty.

While we wouldn’t recommend skipping social media activity when it comes to advertising or general updates (22% of consumers say they prefer to communicate via Facebook, and 15% cite Instagram), the responses reinforce how ingrained more traditional digital channels are for addressing your customers’ needs.

Key takeaway:

Email and texting strategies are still extremely relevant for retailers, but the lesson here is in the why. In a world where it’s getting harder to have a satisfactory interaction with a business of any kind, email and text messages are those few spaces that can still feel personal for consumers.

Everything in a person’s inbox or phone can feel like it’s intended solely for their consumption (the recipient believes it is, at least), and every touchpoint is a chance to have a conversation outside of public view – where relationships built on providing value can be formed. That’s where consumers expect some of their most important communication to be served, like about an order or a promotion.

Poor George, a lifestyle boutique nestled in Cold Spring, New York, began its journey in 2013 as a vintage pop-up and Etsy shop. Founded by Cadah Goulet after working as a merchandiser for a national retailer, Poor George evolved from a side hustle into a dedicated brick-and-mortar store in 2018. Today, Poor George is a thriving omnichannel retail business with a loyal customer base in-store and online, fueled in part by an email newsletter with a 75% open rate.

Square Online has allowed me to build a repeat customer base, keeping my transitory customers engaged. The customisation features, like colour-coding and design elements, have helped me express my brand online cohesively.”

Cadah Goulet, Founder of Poor George, Cold Spring, New York, USA