Retail, shopping & leisure

The new mood

Many people agree that they don’t change their habits unless they are forced to. This is why FutureBrand says that external forces, like the economic downturn, create an opportunity for marketers because people start reassessing their habits. In Australia at least, nearly 80% of consumers have cut back on their spending, and many have changed the way they spend, for example, buying on special (55%), comparing prices more (54%), or buying more own-labels (38%). Some (55%) have also delayed a big purchase, 43% have delayed retirement, and 41% put off buying a car, in the past six months.

Much of this is a crisis of confidence about the future, rather than discomfort in the present. As one interviewee said to BRW magazine: “You can’t help but fall prey to the national mood; you just feel less secure”. Fears of being sacked rose from 10% in December 2008 to 17% in January this year. The big mistake is for companies to sit back, do nothing, and wait for the upturn to come. Instead, they need to be aware, more than ever, of what they do well and go out and do it. While retailers like Waterford Wedgewood, David Jones (Aus), and Go-Lo (Aus) suffer, others like Domino’s Pizza and JB Hi-Fi (Aus) are giving people what they need – cheap, tasty food and home entertainment.

This is not the time for complacency. The spring marketing campaign at Saks New York was “Want It!”, but such an arrogant appeal might not be the best approach. Consumers become much more demanding when their resources are stretched, and they are all too willing to complain, and to spread their complaints online. However, they are generous to companies that give away free things, offer consistent quality, appeal to their nostalgia, or offer some good news in the middle of the misery. The new mood is just that – and it, like all moods, will pass.

The French embrace “new modesty”

The country that brought us Coco Chanel, Karl Lagerfeld, and Louis Vuitton is having a crisis of values – quelle horreur! – is it time to tone down the luxury?! There are signs, according to Lagerfeld himself, of the “new modesty” when bling is out and “savoir faire” is in. This means no more ritzy fashion shows, 200 layoffs at Chanel, and even a drop in Champagne (as opposed to fizzy wine) sales. Rather than just an economic hiccup, Le Figaro claims that people are going to start putting family first, and a French trends expert claims it is a “revolution in values”.

While it might be tempting to think that the French only buy high quality, and always dress impeccably, they are also surprisingly conservative. They do not believe in showing off, most use debit cards rather than credit cards, and it is hard to get a mortgage. They also believe in a sense of balance (see our story on how the French take a lot of holidays!). Lagerfeld may have the last and revealing word: “There is no creative evolution if you don’t have dramatic moments like this”. Bien sur.

Thrifty and nifty in Japan

In Japan, observers believe shoppers are spending less and retailers are learning to discount. Department stores are already feeling the pain, with sales falling on a year-to-year basis for nine months in a row. Meanwhile, supermarket operators are pushing their discount stores, like The Price, and convenience store sales rose 7.4% in November, the seventh monthly increase. Perhaps it is not so much what people buy but how they choose to shop – department stores have been suffering in many countries for some time now.

Most big luxury brands have less expensive alternatives (sister brands), which are popular with women in their 20s-30s. For example, Naracamicie has a sister brand, Rosa by Naracamicie, which is produced in South East Asia. The sister brand has been selling considerably better than the original, which is currently losing sales. Many younger shoppers do not want to pay designer prices when they can get something similar for less. Buying a cheaper version of a luxury brand is not really a sign of thrift.

Japanese companies also have their own ideas for saving money. Businesses have become more interested in buying secondhand office furniture, especially high-end office chairs, in renting meeting rooms rather than owning them, and finding ways to reduce paper use. One enterprising company even uses the foot power of its workers on a floor with LEDs embedded, to generate electricity. Interestingly, workers can look at the display there to see how much power they have generated, a good incentive. It is hard to know if this is less spending, overall, or just more responsible.

Checking out the shopping brain

Persuasion methods have become a lot more sophisticated since Vance Packard’s explosive book, The Hidden Persuaders. There is a reason why most supermarkets look the same today – owners are already well aware of what sells and how. Many make use of aromas to entice us, clever shelf positioning, and music to make us dwell. But now scientists are entering the brain to see how it reacts to certain stimuli and neuroscience, while still in its infancy, offers marketers some compelling possibilities.

The way to observe the brain is through Functional Magnetic Resonance Imaging (fMRI) scanners, which detects changes in blood flow and therefore, shows subconscious reactions below what is spoken. For example, when a customer is struggling to decide between two items, it helps to offer a third “decoy” item, as it makes their choice easier. These scanners are currently huge, but might well be available as a hat one day, to make measuring easier! Of course, privacy advocates are terrified of such an invasion; some consider RFID tags, placed on all items, are potentially invasive because they can be read by anyone with the right equipment. However, do not be too alarmed. RFID tags are generally inert outside of the environments they were designed to operate within. As for reading the minds of customers' this is little more than fantasy. At present it is a little bit like flying over London in an aircraft at night and seeing the lights on in the homes below. You can tell that someone is in, possibly where they are, but you cannot see what the people inside are talking about.

Video monitors are already used to watch what people do in front of certain shelves. For example, one company found that most people took two minutes to buy beer from a convenience store, and most of them went straight to one brand. As a result, brewers might need to spend less on point-of sale-material, and more on marketing outside the shop.

In the end, there is no substitute for friendly staff, easy parking, keeping shelves fully stocked, and competitive pricing. These are fairly low-tech ways of improving the customer experience.

We are how we shop

Martin Luther King once said that when people go to church, it is the most segregated moment in American life. It may now be truer to say that about when they go shopping. This is because there are so many thriving Hispanic shopping centres, Asian supermarkets, and neighbourhoods catering to a diversity of ethic backgrounds. While there are many ethnic groups, it is not necessarily language that separates them anymore. In California, there are fewer children who do not speak English and, in fact, 660,000 Latinos who do not even speak Spanish. Some Hispanic shopping centres in LA, as well as selling Mexican foodstuffs, also cater to their particular cultural needs – wider aisles for big family groups, entertainment for kids, and a different kind of sales patter. This does not mean that Hispanics always stay within these centres; many Latinos also go to Gap or Asian supermarkets. But how they choose to shop may say more about the community they feel part of than going to church was in King’s time. We are what we eat?

Catch ‘em while they shop

In-store advertising is a relatively new field, as most shops have relied on logistics and procurement for their success, and mass media advertising was until recently so effective. Some still doubt the ability of in-store advertising to catch the eye of busy shoppers. But expect more focus on in-store media as spending on below-the-line activity outpaces traditional advertising by 300% and 95% of companies in one survey plan to maintain or increase their investment in in-store media.

In-store advertising makes several promises: smart targeting for location, day-part, or shelf area; emotional engagement through relevant video; accountability using metric such as Pioneering Research for an In-Store Metric (PRISM); and brand integration, where in-store ads relate back to sponsorships or other products within the brand. The PRISM method is to install sensors and auditors to understand store traffic, and to divide the store into four-foot sections and record every marketing message in that section. Retailers are then better able to relate footfall and ads to their daily sales.

The use of television in-store must also be reassessed, because the traditional 30-second slot is too long for shoppers: the longest they are likely to stand still is 10 seconds. This calls for a great deal of creativity, association, and linking to other familiar images, to make an impact. Researchers also claim that people who are queuing at the checkout think they have spent less time waiting if they were watching TV. It looks as if supermarket shoppers are going to have a lot more to think about than whether they’ve run out of tomato paste yet.