What retailers need to know about consumer spending this

The holy month of Ramadan is always a busy time for retail. After a month of fasting from 23 March to 21 April,  Eid al-Fitr, the festival of breaking the fast, will be celebrated for around two days, and will most likely lead to an increase in retail sales.  Based on last year’s spending data, marketers need to start focusing on online sales in 2023, according to Taranjeet Singh, managing director of South APAC for Criteo, a commerce media company.. “Looking back at last year’s retail d

tail data, we found that initial online sales in Southeast Asia (SEA) saw a 19 per cent increase in early April 2022 compared to the last two weeks of March 2022,” he told Inside Retail.

Sales figures continued to rise during Ramadan until approximately one week before Eid. Within the region, Indonesia saw a spike of 68 per cent a week before Eid, and Malaysia saw a 35 percent increase in retail sales six days before Eid.

Singh believes that consumer spending habits tend to follow festive spending patterns. Despite ongoing inflation concerns, he expects Ramadan in 2023 to see a rise in retail sales, similar to this year’s Lunar New Year, which saw a 26 per cent increase in sales.

The company’s recent study showed that consumers are still buying products they value despite the rising costs for non-negotiable items. 

“Additionally, 40 per cent of them answered they will be buying gifts for future holidays and birthdays due to rising prices, which suggests that consumers are still spending,” he stated.

Key trends

Interestingly, data from last year showed a change in online shopping patterns for consumers in Indonesia and Malaysia during Ramadan. Both countries saw the highest numbers of sales from 12-1pm.

“Consumers were likely shopping more during lunch hour as they were fasting. The converse is true during times of breaking fast, which saw decreased sales events in Indonesia,” Singh said.

He feels retailers should take note of these online shopping patterns, and to further increase sales, marketers can consider tactics such as running time-sensitive promotions during these crucial periods.

But while these tactics can help brands cut through the noise, the company’s study found that 91 per cent of customers surveyed still cited ‘product quality’ as a key factor, which trumped ‘free delivery’ at 90 per cent and discounts and coupons at 84 per cent.

“Consumers also appreciate it when companies have principles like eco-friendliness and loyalty programs. Marketers can capitalise on making sure their products are of the highest calibre and develop loyalty programs that encourage customers to keep buying from them,” he added.

Staying ahead

With the rise of digital-first solutions, from superapps to online commerce and omnichannel solutions, the battle for customers’ wallets in the APAC region is getting fiercer. Singh feels that marketers should be investing in acquisition campaigns built on first-party data.

“These can provide durable audience strategies for marketers to reach and engage lookalike audiences whose shopping behaviours and preferences best resemble their existing customers,” he reiterated.

He feels that leveraging first-party data that is continuously refreshed to build audience segments helps marketers’ strategies evolve alongside consumers’ needs and behaviours to ensure they always know how to provide the most value to their customers.

“This strategy can be used all year round, not just during the festive seasons, to optimise the approach with the best audiences and lower customer acquisition costs while driving long-term customer lifetime value,” he elaborated.

Perpetually switched on

According to Singh, another strategy to invest in is an always-on customer acquisition channel. This helps to continuously bring in new, relevant customers to the business. 

“With this, marketers can generate new customers year-round, not just during festive and peak shopping seasons. By activating a digital campaign that uses continuous lookalike modelling, it can engage shoppers who are similar to its best customers,” he explained.

Basically, when marketers share a regularly updated list of their existing high value customers, it can be used to identify and target new shoppers who exhibit shared characteristics. This has the potential to increase revenue across the board.

An always-on retention channel is the final strategy that Singh recommends. It should be anchored consistently on transforming new customers into repeat customers.

“This results in loyal customers that ultimately secures the business higher lifetime value. Marketers can tap into this strategy by re-engaging their existing customers with differentiated messaging,” he said.

By segmenting existing customers into hyper-focused groups such as shopping preference or purchase behaviour, marketers can develop novel test-and-learn messages for each group. 

“The distinctive messages and personalised ad experiences will then engage the different audiences better,” he concluded.