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Published February 4, 2010
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The Brave New World of Retail



Odysseus had nothing on the American retailer. After all, the hero of Homer’s Odyssey only had to endure 10 years of troubles. To hear some analysts talk about it, the retail landscape will never be the same—which will leave some players wandering alone in the wilderness.

“‘The Great Recession’ and how shoppers responded to it have fundamentally changed the future of retail. The recession brought to an end one of the most transformational decades in our social, political, economic and shopping history,” said Wendy Liebmann, chief executive officer of WSL Strategic Retail, on the release of a preview of its2010 How America Shops MegaTrends study entitled,“The Odyssey Begins to the New Retail World.”

Four in 10 shoppers still enjoy shopping—or at least the thought of it in principle.
“This recession wasn’t the beginning of a behavioral shift, it was the end. After eight years of living through calamitous change that transformed the way Americans live and shop, the recession was the final curtain call,” added Candace Corlett, president of WSL Strategic Retail.
As a result, according to WSL Strategic Retail, there are several guideposts that mark the future of shoppers’ attitudes:

The End Is Not Near: While some economists claim the recession is over, shoppers don’t believe it. The majority of those surveyed believe their own personal recession will not end for at least one to two years. Discounting, lower-priced options, private label, smaller sizes, better value sizes, coupons, price-checking—anything that helps shoppers manage their weekly spending more effectively—will remain on their list.

Fear Is the Emotional Driver:
Fear of the future is now a very powerful influence on how Americans live and shop. The optimism that defined Americans for decades is no longer embedded in the shoppers’ psyche.

Less Is More and It’s OK:
Having had to make do with less, shoppers realize they don’t need many of
WSL’s 7 Rules of the New Retail World

1. Hear and heed the“Less is More” message.
2. Make new retail rules.
3. Make people happy.
4. Restate value.
5. Reframe “What’s Worth it Now.”
6. Rationalize SKU rationalization.
7. Seize the white space.
the things they used to buy, and many of the cheaper brands they’ve tried are just as good as the pricier ones they once bought. Shoppers went from regretting what they couldn’t afford to accepting what they could, and feeling smart about it.

The Joy of Shopping Is Still Real (For Some): A good number of shoppers (4 in 10) still enjoy shopping—or at least the thought of it in principle. The connection, the emotion, the experience of shopping is still valued by many who have been forced in recent years to cut back spending, avoid places they may be tempted to overspend, and not browse at all.

New White Spaces Emerge:
Most exciting about this new retail era is the white space that’s materializing. We are no longer living in a shopping world where distribution means food/drug/mass/club for everyday products and department and specialty stores and malls for special things.

“For over 20 years we’ve followed American shoppers to understand why, how and where they shop, and where and how they will shop next. The emerging retail world may look familiar but it is not. We’re about to embark on a journey into the retail unknown. An odyssey of almost mythic Greek proportions: where shoppers are totally in control; where purchase decisions begin at a different point; where ‘bricks’ and ‘clicks’ merge seamlessly with wireless shopping and ‘clicks’ define the road ahead. New white spaces are emerging upon which we can/will/must write a new shopping history. The journey begins now,” Ms. Liebmann concluded.

Hispanic Spending Rose Even as Economy Faltered



While the U.S. economy floundered, and consumers as a whole tightened their belts, the growth in Hispanic spending was twice the growth in general market spending, according to a December 2009 analysis of consumer expenditures and corporate growth strategies by the Latinum Network. According to the Bethesda, MD organization, non-Hispanic consumer spending between 2005 to 2008 grew only 2.9%, while Hispanic consumer spending rose 6.4%.

Latinum’s report offers an in-depth analysis of the latest figures from the U.S. Bureau of Labor Statistics on spending behavior as it relates to the Hispanic community. According to Latinum, significant commercial opportunities exist in major categories where Hispanic consumer spending growth far outpaced the general market, including in the laundry and cleaning supplies sector.

“As companies look to accelerate growth in 2010, brands that ignore, or misread, the impact of cultural factors on purchasing behaviors may leave the lion’s share of U.S. Hispanic buying power on the table,” noted Latinum principal David Wellisch. “This segment within the Hispanic market represents an attractive growth opportunity for many companies which have traditionally targeted their incremental investments on the unacculturated consumer. They’re growing in number, they have the most money to spend, they behave more like general market customers in terms of what products they buy and how much they spend, yet they still respond well to culturally-relevant messages.”

More info: www.latinumnetwork.com

Life’s Little Luxuries, Dispensed on Demand



The recession has brought about a redefinition of luxury, especially in the currently moribund aspirational segment, according to New York-based strategic consultancy Toniq (www.toniq.com). While some luxury brands have responded to “luxury shame” with more a discreet display of their logos, a key shift will be toward the creation of limited edition affordable designer artifacts, noted managing partner Cheryl Swanson.

Sephora branded beauty vending machines can be found in several U.S. airports.
Dubbed “lux-ifacts” by Toniq, these items represent the designers’ level of quality prestige at friendlier price points—think fragrance or accessories—that allow consumers to indulge their need for quality, design and prestige with small, yet beautiful pieces.

According to Toniq, savvy marketers will seek to energize their lines with special collections in curated retail/gallery experiences, pop-up showcases and interactive applications geared for mobile 24/7 shoppers—such as designer basics in branded vending machines at private clubs, airports and restaurants. Products primed for“Lux-O-Vending”range from comfort shoes to accessories to makeup to fragrance, according to Toniq.

Sephora is already there. The retailer has set up beauty vending machines at airports in Nashville, TN,Las Vegas, Indianapolis, Dallas, New York and Houston at which travelers in need of a last-minute skin care, fragrance or cosmetics items can pick up what they need while en route to their next destination.

The machines feature popular brands such as Bare Escentuals, Smashbox, Philosophy, Peter Thomas Roth, Murad and StriVectin, to name a few. They have touch screen menus that offer product information and pricing. Sephora may expand the dispensers into malls and JCPenney stores this year, according to reports.

Brand Familiarity Ranks High in Beauty Business



More than 90% of surveyed shoppers cite brand familiarity as the most important influencer when purchasing beauty products, far surpassing the 73% consumer packaged goods (CPG) benchmark, according to new research from Information Resources’ Beauty Shopper Report. Price, while important for many decisions, was a distant second, according to the Chicago-based group’s report.

Brand preference, in addition to a continued focus on affordability, remains paramount and underscores the rapidly evolving and unique nature of shopper attitudes and behaviors shaping the $11.5 billion U.S. beauty market.

“The beauty industry is characterized by significantly different dynamics than other CPG market sectors, creating a major opportunity for beauty marketers and retailers that can quickly and effectively leverage the nuances,” said John Deputato, senior vice president, Client Solutions, IRI. “Even within the hair care, skin care and cosmetic segments of the industry, shoppers often exhibit behaviors unique to each of those categories. Shopper behavior diverges a great deal among these segments particularly in times of changing economic climates, such as today’s emergence from the recession, where some consumers are exhibiting a new confidence, while others are keeping their frugal practices in place.”

More info: http://us.infores.com


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