Retail Observer

RETAILOBSERVER.COM JUNE 2014 38 I 've been writing for various industry magazines since the 1980's. Many of those journals—like MART, TVRO, Independent Retailing, and NARDA News—are no longer around. But others, like this one, have grown and changed. Sometimes columns are easy to write as a topic quickly jumps out at me, and other times I really struggle to find timely, meaningful subjects. And at times like this, little snippets of news-worthy ideas are scattered across my desk. That's how Bits and Pieces columns come about. Each year, the National Retail Federation's STORES magazine commissions a study to measure consumers' attitudes about shopping. This year's study, conducted by Prosper Insight & Analytics, seems to mirror what we hear about the economy. Before his retirement, Fed chief Ben Bernake said "the recovery is incomplete." In March, the Conference Board reported that the Consumer Confidence Index had risen to 82.3 but also found that consumers were less optimistic about income growth. Wage stagnation continues to plague most Americans. The New York Times has filed multiple reports about the shrinking American middle class. The median American middle class income has fallen behind many of our global neighbors. With that in mind, 53% of those surveyed by Prosper said they will focus on what they need instead of buying what they want. Nearly half—48%—say they have become more practical and realistic in their purchases. And 39% have become more budget conscious. But there may be a silver lining. In February, the New York Times reported that although the middle class is eroding, "In Manhattan, the upscale clothing retailer Barneys will replace the bankrupt discounter Loehmann's, whose Chelsea store closes in a few weeks. Across the country, Olive Garden and Red Lobster restaurants are struggling, while fine-dining chains like Capital Grille are thriving. And at General Electric, the increase in demand for high-end dishwashers and refrigerators dwarfs sales growth of mass-market models. G.E. Appliances' fastest-growing brand is its Café line of refrigerators and other appliances, which is directed at the high end of the market." But although the high end market is growing it's still smaller than the middle. And the NRF study found that consumers were most willing to give up luxury goods like expensive handbags, jewelry, club membership and maid service. Americans are unwilling to cut back on technology—cell phone service, high speed internet, upgraded mobile devices and tablets and streaming video. Demographics also bodes change. There are now 80 million Millennials. In a white paper written by Rick Chavie, VP of Omni- Commerce at Hybris, he found that 82% of that cohort preferred to shop in bricks-and-mortar stores rather than online. As the most connected generation in history, though, 89% say they use in-store connectivity to compare prices and for product and customer reviews. And then there's this. In a recent presentation, Ben Tyson of Google reported on research showing that 66% of first time large appliance buyers purchased their appliances online. He did say that anecdotally, it appears as if subsequent purchases are made in store. As a group, 18—34-year-olds feel more optimistic about the economy than any other and are most interested in shopping right now. And finally, we've come through the implementation of the Affordable Care Act and the recent government sequester without having the sky fall down. Although Congress is still mostly at a stalemate, several states are moving forward on their own to raise minimum wage and take on other critical issues. So what are the takeaways? • Cautious optimism might describe the mood of the country. • The movers and shakers are definitely young. Although they're tech savvy, they'll shop in your stores if you reach out to them in ways that are meaningful to them. • Show your customers the value—the benefit to them—and they'll buy high-end, full-feature, profitable products. If you haven't done it yet, now is the time to define your niche. If you want the low hanging fruit, make sure you advertise the lowest price in your market. And be willing to take low margin, competitive deals on entry-level products. But it may be worth the effort to spruce up your showroom, raise the volume on the music in the store, hire some young team members, get on the social marketing bandwagon, and ask customers more questions in order to lead them up to cool, new features. One thing is for sure. If you keep doing what you've always done, you'll end up exactly where you are now. And that might not be such a good thing. Elly Valas Retail Views BITS AND PIECES Elly Valas is the Marketing Services Director for Nationwide Marketing Group. She can be reached at elly@ellyvalas.com or at 303-316-7569. Visit her website at www.ellyvalas.com. RO

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