Change is the order of the day, some by choice and some by force. Retail is changing by the force of economic winds. However, there are potentially positive byproducts of the current state of affairs.
The term correction is being used to describe what’s happening in the financial markets, but it could also be applied to what’s happening in the retail environment. Brands, and their retail representatives, are taking a deep breath to examine who their customers are, who they are to the customer then who they need to be. That examination involves getting closer to the consumer and trying to determine their very specific needs and wants. Macy’s for example is taking a regional approach to connect with their customer — matching the product mix to the local lifestyle. Women in Pittsburgh will have a very different selection than women in Manhattan. The idea is to appeal to the customer’s actual way of life and provide products that are truly valuable.
Another approach emerging from this correction is appealing to the shoppers’ values. SunTrust is an example of a company pushing the values of honesty, integrity and service over great rates. Jayne O’Donnell of USAToday wrote an article this week about apparel retailers offering more modest clothing choices to appeal to the spartan inclinations of today’s tentative shopper.
At the end of last year, Wall Street Journal heralded that bling is out…sensible is in. Even luxury goods manufacturers are evaluating shoppers’ values and making adjustments. Martin Lindstrom wrote a fascinating article on being offered a brown paper bag to carry his Hermes purchase out of the store. Customers of the luxury retailer are forgoing the emblazoned shopping bag for fear of being identified as an ostentatious spender.
To quote Lindstrom, “Things have changed.” But could it just be a correction? Could the power be shifting back to the hands of the consumer to determine what they want, how they want it and forcing retailers and manufacturers to give it to them. Selling to the customer what they need and want versus what the marketer wants them to want.
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…and the manufacturer says to the retailer. “What can we do to improve?”. The retailer answers, “lower your prices”. Let the corrections continue. Recent articles on Safeway and Kroger views on CPG price policies are very telling. Commodity prices have dropped and retailers are expecting that lower costs to them should follow suit. Witness the recent Delhaize – Unilever dust up in Europe (which has now been resolved). Bottom line: It is a new world…Goldie. Retailers own the keys to the castle and the consumer in once again…King.