Business and Operations
Fresh Trends: December 2009
By Michelle Brisebois
By Michelle Brisebois
If we’re honest with ourselves, most of us are hoping this “recession
thing” will just go away so we can get back to the good old days.
If we’re honest with ourselves, most of us are hoping this “recession thing” will just go away so we can get back to the good old days.
For a generation reared on designer duds and imported water, the thought of being on a budget is almost too much to bear. We’re the generation who coined the phrase, “Those who say money doesn’t buy happiness simply don’t know where to shop.”
That was until investments plummeted in value, housing softened and companies started piling the bodies up in the back 40. The financial meltdown of 2008 was intense, deep and widespread. Even those who hung onto their jobs lost money in the markets or perhaps lived with a partner who became unemployed.
Just another recession? Not by a long shot, and consumers are undoubtedly different now. It’s time to face facts and examine just how much retailing has changed in this new economic climate – and what it means to your business.
Frugal is trendy
For many consumers, acquiring more stuff was their raison d’être. With this recession touching every age group and business sector, so many people tightened their financial belts at the same time that it’s actually become trendy to be frugal.
According to a July 2009 article in the Financial Post, “The percentage of disposable income saved by U.S. consumers shot to 6.9 per cent in May, the highest level since December 1993. The rapid increase in the rate, which stood at zero in April 2008, has caused a historical anomaly by surging ahead of the savings rate of cautious Canadians. Canada’s savings rate stood at 4.7 per cent in the first quarter.”
Catchphrases such as “Recessionista” and “Frugalista” are popping up everywhere. According to Business Week, 60 per cent of Americans say they’re wearing clothes several times between washes to cut cleaning costs. And 72 per cent say they now haggle before they buy some items, up from 56 per cent two years ago.
Paco Underhill, the father of retail science, stated in an interview with PBS that, “One of the fundamental issues we’re trying to discover as consumers is that there are no acquisitions that are transformational. Acquiring that iPod or that tube of lipstick or that Maserati doesn’t change us into anyone other than what we were to start out with; therefore, our relationship to consumption here has to be more real.”
As a retailer you might want to consider bundling products together and offering them at a slight discount for short periods of time. The consumer saves by buying them together and you secure a higher sale. Smaller portions may be a way for people to save while you stay profitable. Customers are keen to acquire experiences instead of stuff. Help them use your products to create memorable meals.
Blink once and it’s gone
If you admired a shirt in a store two years ago, you were often assured that if you came back a month later they would still have your size and at least a 50 per cent discount. As retailers continue to cut costs, they’re keeping inventories low, which means consumers are realizing there may not be more in the back room. Capitalize on this trend by introducing limited edition items. Starbucks offers its pumpkin spice latte only in the fall – then it’s gone. This makes it special and creates a sense of urgency for the consumer.
Researchers are noticing that merchandise consumers pick up and intend to purchase is being abandoned more frequently throughout stores. There’s actually a term that’s been coined to describe this phenomenon: “de-shopping.” For some consumers, 15 minutes of ownership as they push it around in their cart will be enough and then they’ll dump it.
As a result, retailers need to do a better job of telling the story of their products. The “if you build it, they will come” approach to selling won’t do the trick anymore. Focus on origin of ingredients, serving suggestions, folklore, tasting notes. The seduction has never been more important.
Growth will come from new faces
The research is suggesting that consumers are still buying the same brands as before – just less of them. Instead of three pairs of jeans, you’ll now make do with two. That salon hairstyle now gets stretched longer between appointments but you haven’t gone to a discount salon just yet.
If your growth strategy relied on up-selling to existing customers before, you’ll need to amend that now. Advertise in local papers. Invest in the creation and mailing of a direct mail piece to promote your store and a compelling offer that screams “get in here now!” Many big companies have slashed their marketing budgets, so those mailboxes that used to be filled with flyers aren’t so much anymore. Here’s your chance to get noticed.
Will every customer continue their frugal ways when the recession ends? Probably not. It’s estimated that 10 per cent of consumers will make these new shopping habits permanent. Consumer spending has driven our economic growth in recent years and that simply can’t continue. As grandma used to say, “It’s not how much money you make that counts. It’s how much money you keep.”
Michelle Brisebois is a marketing professional with experience in the food, pharmaceutical and financial services industries. She can be reached at email@example.com .