Retail, shopping & leisure

Sari-Sari stores

In the Philippines there are 430,000 sari-sari (convenience) stores which, according to AC Nielsen, are responsible for 89.9% of retail spend and 60% of FMCG (fast moving consumer goods) sales in the country. So what? Well one of the key features of sari-sari stores is what's called tingi - which means small packaging formats or sizes. Tingi was originally a response to the fact that household budgets were also very small, but more recently it has more to do with convenience. As in other countries, people are time starved and small packs that can be easily carried home or to work (or consumed on the move) make huge sense. Moreover, the convenient (local) location of sari-sari stores coupled with personal service and even account (loan) services mean that the sari-sari model could teach Western retailers a thing or two.

Ref: Business World (India) 7 January 2005, Consumer Trends; IT Innovation, modern sari-sari stores, N.Aquino/F.Capistrano. See also Manila Times (Phil)

Luxury for the masses

One of the most significant retail trends of recent years has been the shift towards luxury goods ("luxury is the new essential"). A mundane example is the way that real coffee (eg Starbucks) has, in the space of less than a decade, moved from a US East Coast boutique brand to an everyday necessity across an increasingly large part of the world. In other words, socioeconomic factors that help to explain and describe 'luxury' have shifted. This is the conclusion of a report by The Boston Consulting Group entitled 'Trading up: Trends, Brands, and Practices' which puts a value on the size of the new luxury market in the US (US$440 billion) and elsewhere in the world (US $400 billion). So what factors are behind this growth? The main reason is simply that household incomes and wealth in most countries have grown steadily over the past 20-30 years. There is also the fact that women are working and earning more and women are an increasingly important factor in purchasing decisions. There are also two other important demographic factors at work. First, there are more single person households (often childless too) and they tend to have high disposable incomes. Second, populations are ageing and older people tend to have higher levels of disposable income. In France, for example, more than 30% of the population are aged over 50 and they hold over 50% of the country's wealth, while in Japan 40% of the population are aged 50+. Finally, some goods are getting cheaper which frees up money to spend on non-essential goods and services.

Ref: Working Knowledge/Harvard Business School (US), 18 April 2005 'Selling Luxury to everyone', J.Jette. , (US) 21 April 2005 'European New Luxury Market Estimated at US $400 billion outside US'. Links: Role of provenance and authenticity in luxury goods market.

Meet. Hang. Shop.

We've seen virtual malls before, but is a little different. As well as featuring two floors of famous brand names - from Target to Sephora - the site allows shoppers to just hang out with their friends. Shoppers also earn discounts, review products, post personal profiles and upload pictures of themselves and their friends. Yub stands for Young Urban Buyers and is essentially a networking (introduction?) site for people who like to shop. This effectively means teenage girls so as a result some of the content is shall, we say, 'direct'. A further key element is that if your friends buy a product listed under your profile you earn virtual Yub points - which ultimately means real cash.

Ref: (US) 15 April 2005.

Green furniture

We all know about organic food and we've even seen a shop selling organic shoes (in London) so what about organic or eco-friendly furniture? The idea isn't quite as wacky as you might think. Furnature (sic) is a Watertown Massachusetts (US) based retailer that is the world's first organic furniture store. The shop sells everything from sofas, tables and chairs, to beds, mattresses, pillows and sheets - all of which have been made using organic production methods. So who is this buying organic furniture? The original buyer was essentially someone with health problems (eg allergies or sensitivities to certain chemicals). However, this group is now a minority. Most of Furnature's customers are LOHAS - people who seek Lifestyles Of Heath And Sustainability that wish to avoid products that pollute the environment or their small part of it.

Ref: Sense Worldwide (UK) Sense Bulletin 12 April 2005 ' Pull up an organic chair and sink into living 'green''. See also

Changing the way we shop

80% of Ford's customers use the Internet to find out which car they want to buy, and how much they want to pay, before they set foot inside a Ford dealership. Similarly, 75% of mobile phone buyers in the US use the Internet to research products, although only 5% end up buying online. Last Christmas (2004) was the busiest ever in the US for online retailers who sold $25 billion worth of products (up 25% over the period 1 November to December 26 compared to 2003). So is e-commerce back? The answer is yes, but not in the way that most people predicted. Customers are seizing power thanks to the Internet. They are now better informed about everything from prices to reliability and ethical issues. This means that where word of mouth was once limited to close friends, 'word of mouse' (and now 'word of thumb') has no such geographical restriction - so watch out retailers and manufacturers if you set a foot wrong. Another change is that since initial window shopping now takes place in cyberspace, first impressions are strongly influenced by website design rather than physical store design. Equally, many consumers no longer gather information and make purchases in a single store, which theoretically reduces the need for salesmen. However, the opposite can also be true. If you agree that it doesn't matter where people finally buy your product, the need for brand 'showrooms' that showcase your products and feature outstanding customer service make sense even if they don't actually sell anything. If these changes seem like a long way off that's because in some areas they are. But wait until the younger generation really starts spending. They have grown up with the Internet and 'always on' devices and they will have the power to really change how we shop.

Ref: The Economist 2 April 2005 'A survey of consumer power'.

Kiosk retail

Softwide is a UK retailer that sells software from small kiosks. Are they mad? Surely a better model would be to allow customers to download software from a virtual store? But no. The company's unusual business model is reaping rewards as first time software buyers are attracted to the fact that they can receive advice and walk out with a physical disc in their hands (especially useful if you want to buy software as a gift). The company sells different products to other retailers too. In a traditional computer superstore, 60% of software is games and 35% business software. In Softwide the split is 50% educational or reference, 30% business and only 20% games.

Ref: The Economist Technology Quarterly (UK), 12 March 2005. 'A wider choice of software'.