How to Use Incentives to Combat the Summer Sales Slump
Call it the late-summer slump. The period after kids go back to school and before the holiday shopping season begins is traditionally slow for brick-and-mortar retailers. Now, as inflation-weary consumers cut back even further on spending, during what is already a challenging time of year, retailers are bracing for the worst.
“Consumers have become much more deliberate in their shopping habits over the last several months,” says Russ Mann, vice president of marketing at the Advertising Checking Bureau (ACB), a firm that develops, manages, and administers local channel marketing programs for manufacturers and retailers.
While a temporarily slow sales period doesn’t necessarily mean brands need to worry, Mann does recommend that companies take action and consider switching up their tactics as a way to wake up their target consumers.
Chief among the strategies he suggests is offering rebates and incentives, which can make products more attractive by giving consumers the feeling that they’re getting more bang for their buck.
“For brands, being unique and grabbing the attention of a target shopper is always a good idea,” Mann says. “For example, they could have a product that has been sitting in their cart and having that incentive or rebate is the final need to land that sale.”
Brands that are eager for a restart before the new season arrives should consider how they can make their existing incentives or loyalty programs more attractive, to break the summer slump and get consumers excited for what they have to offer.
“Consumers are hungry to save money whenever and wherever they can, so ensuring that customers’ preferences are met while providing the best deal possible will absolutely attract consumers,” Mann says. “Summer slumps tend to prepare brands for the upcoming holiday shopping season, which is a busy time of year for both the brand and the consumer.”
Although consumer spending appeared to pick up at the start of the third quarter — thanks in large part to falling gasoline prices — the combination of inflation and higher interest rates could push sales lower in 2023.
Retail analysts expect any slowdown in sales to be particularly troubling for retailers that have benefited from rising prices thus far. As discretionary spending falls and sales decelerate, big box retailers are likely to be hit the hardest. In quarterly earnings released late last month, Target and Walmart reported a mix of declining sales of discretionary goods and lower profits, along with a glut of inventory that could be hard to unload.
Going forward, Mann anticipates consumers will become even more deliberate in their shopping habits. He also expects to see a push toward buying online using virtual payments. That could be a win for brands that already offer digital or virtual rewards, and an opportunity for any brands considering ways to re-energize their rebate and incentive programs with additional payment options.
“Offering a wide range of payment choices including virtual, physical cards and gift cards provides consumers with the satisfaction of personally selecting the reward that best fits their lifestyle,” Mann says. “Brands must recognize new shifts in consumer reward preferences and modify their rebate and incentive programs based on these trends.”
Targeting consumers with sweepstakes that tie into rebate programs can generate significantly higher participation levels. Mann says rebate promotions that tie-in to local sporting or entertainment events are an especially good idea for companies that want to add excitement to their programs.
“As we all are well aware, rebate and incentive programs are constantly changing along with consumer preferences,” Mann says. “Merging data from previous incentive and rebate initiatives with research on industry and consumer trends will allow brands to know where their target customers are and what they are looking for.”
