How can brands turn fleeting deals into lasting value?

As sales season nears, New Zealand consumers are getting strategic about their splurges.

In brief:

• The latest data from the EY Future Consumer Index offers insights into New Zealand consumer values, behaviours and priorities in a rapidly changing world.
• New Zealanders are more optimistic than they were six months ago, but shoppers remain cautious about splashing their cash.
• Permanent shifts in consumer behaviour challenge retailers to rethink their approach to discounts and promotions.

With the Black Friday and Christmas season sales around the corner, the October 2024 EY Future Consumer Index reveals promising signs for retailers. The October 2024 data found 10% fewer consumers are struggling with rising costs than they were 12 months ago, alongside a 9% drop in those cutting back on non-essentials. After two tough years, this is welcome news.

Yet challenges remain: over a quarter of New Zealanders (28%) expect to be worse off in six months, and 23% still worry they may need to sell their homes. The economic recovery is not lifting all boats.

The recent cut to the official cash rate was an early Christmas gift for retailers – reflected in Retail NZ’s October temperature check, which revealed a boost in business optimism. Two-thirds (65%) of retailers said they are confident or very confident in their survival over the next 12 months – up from 57% the same time last year.

The fourth quarter is make-or-break for many retailers in New Zealand, with key sales events over the Labour Weekend, Black Friday and Christmas period providing a vital buffer for quieter months.

While nearly eight in 10 New Zealand consumers say they are holding off on making certain purchases until major sales events, less than half are actually planning to spend. For retailers, this presents a challenge: how do they reignite genuine excitement around their sales?

Why the sale is not enough

It’s no secret that the “recommended retail price” (RRP) has lost its clout with many consumers. The RRP is often viewed as an inflated figure designed to make discounts appear more appealing. Years of constant sales, limited-time offers and promotions have conditioned consumers to believe they need never pay full price.

This perception is amplified by the abundance of online promotional codes and loyalty discounts, which feel like standard price adjustments rather than special offers. Many shoppers now see discount codes as part of the buying process.

For retailers, especially those gearing up for sales season, this shift in behaviour demands a rethink of pricing strategies. In a market where customers are increasingly sceptical of “deals,” retailers need to create a sense of genuine value.

How do we define customer value?

Perceptions of value are shaped by a mix of emotional, ethical and practical factors.

For some consumers, sustainability and ethical or local sourcing add value and purpose to their purchases. Others are focused on quality or exclusivity, whether that’s through limited editions or custom options.

A compelling brand story fosters trust and loyalty in some consumers, while the product experience – like thoughtful packaging or an engaging unboxing moment – can enhance perceived worth for others. And everyone wants a personalised shopping experience.

In uncertain times, as people become more mindful of their spending, they expect more from their purchases. They want assurance that their hard-earned money is well spent – to see, feel and understand a product’s value before committing. This shift benefits brick-and-mortar stores, and our data shows 54% of consumers are gravitating towards in-store shopping. For e-commerce, the takeaway is to build a reliable and engaging online experience – something that has been a challenge in New Zealand, as I’ve previously explored.