Walmart versus Amazon – two retail behemoths in competition with one another for online sales. In the retail industry, so much attention has been paid to how Walmart is competing online – but what’s happening in-store is almost as interesting as their online initiatives. Walmart seems to be reinvesting their GOP-led tax overhaul savings into enhancing price investments to compete with discount stores such as Big Lots, Dollar General, and Dollar Tree. These discount retailers are going to have to lower their prices or find other ways to appeal to shoppers to not lose market share. Maintaining their strongholds in rural areas will be key and using direct mail in creative ways might just be the ticket to competing with Walmart’s strategy.
Rural Consumers are Value Shoppers
Low income shoppers are 44% more likely than their higher-income counterparts to shop at brick-and-mortar discount retailers – while higher-income shoppers are more likely to shop online. When people talk about the “Great Retail Apocalypse,” about brick and mortar businesses struggling to compete with the likes of Amazon, often the message is misleading. What’s happening is that the middle class, who have always been the bread and butter of brick and mortar retail, has been shrinking – leaving a gulf between high-income shoppers and low-income. This is likely why Walmart is focused on appealing to higher-income shoppers online and lower-income shoppers in-store.
Rural Consumers Like to Shop at Discount Stores
With that said, we wouldn’t categorically say rural consumers are “low-income,” because that would be inaccurate. But when shopping, they do tend to be bargain shoppers. Rural consumers are 4% more likely to name “price” as their primary reason for buying groceries at a store. And for health and beauty aids, they are 6% more likely than their urban counterparts to name “price” as their primary reason for buying health and beauty products. In the past month, rural consumers are 23% more likely than average to shop at either Family Dollar, Dollar Tree, or Dollar General. They are 32% more likely to shop at these stores than their urban counterparts. Rural consumers are also 8% more likely than their urban counterparts to shop in a physical store for household supplies.
What this means is that, when discussing the price competition between Walmart and dollar stores, rural consumers are very much relevant to the conversation and discount retailers should be thinking of how to best reach these consumers with their offerings.
How Do You Reach Rural Consumers?
When looking at how rural consumers are influenced for their grocery purchases, we can easily see that any type of media that helps them get the best deal possible is going to have the greatest influence. Direct mail is a cost-effective way to deliver those coupons and advertising inserts that have such a heavy influence on grocery purchases.
Direct Mail Response Rates
Influence is certainly important – but what about actual response rates? According to the DMA, direct mail response rates are on the rise. Last year average response rates were at 5.3% – a 43% increase from the previous year and the best it’s been in the last 13 years. This is likely due to better targeting with better quality data being used by marketers in their campaigns. Which brings us to the big questions – how will discount stores leverage both print media and data to compete? What creative strategies will they implement to generate foot traffic in rural areas?
Direct Mail + Discount Stores = Winning Strategy
Direct mail marketing is an obvious choice for discount stores. It connects your business with the customer, giving them coupons, offers and specials to drive them into your store. With direct mail response rates on the rise, and our ability to refine your targeting to the best customers for your business, direct mail offers a winning strategy to bring your business results. Interested in learning more? Fill out the form to speak with one of our knowledgeable experts about the best direct mail solution for you!
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Deloitte analysis of The Great Retail Bifurcation survey data, 2017