Why consumers are spending less on promotional events

The discount they get do not match their expectations.

Southeast Asian consumers are now spending less on promotional events such as Black Friday, Chinese New Year, and Songkran festival, as their expectations of discounts are not aligned with reality.

A report by Simon-Kucher & Partners found that consumers, especially in Singapore and the Philippines, are expecting a discount that is 11% higher than the actual deals they can avail.

It also found that one in three Singaporean consumers is “sceptical” about receiving higher and more appealing discounts through loyalty programmes even if high brands and retailers continuously invest in it. 

“This indicates a global need for brands to rethink customer loyalty strategy,” it said.

On the other hand, Thai and Filipino consumers are more confident about getting discount benefits from loyalty programmes.

READ MORE: What retailers in China could gain on Singles Day

Aside from this, scepticism about brands’ promotional communications is also growing, with nearly a third of Singaporean consumers distrusting starting shelf prices.

Simon-Kucher noted that preference towards promotional mechanics varies across markets in the region and product categories but consumers are more attracted to percentage discounts for the majority of the categories which include technology, luxury goods, clothing, and shoes.

Online shopping, meanwhile, is still the preferred channel during promotional periods with around 80% of the respondents in the region looking for a good deal when visiting a store or website and is higher that the average of 64% globally.

“This signals that brands are losing power over influencing consumer choices, with just over one in two shoppers selecting their favourite brand over a promotion,” Simon-Kucher said.