Back to Basics

The new workplace accessory for professionals aged 35 to 54—the brown bag lunch—is a clear indicator of a shift in shopping patterns. Besides eating out less, consumers are more selective—shopping the clearance racks, buying in bulk, stocking up on sale items and using coupons. Although a store manager’s first reaction might be to add more endcaps and cover the shelves with “sale” and “clearance” signs, retailers eager to respond to the new recession-driven shopping habits need to proceed carefully before relying solely on deep discounts. According to Bill Chidley, senior vice president at Interbrand Design Forum, retailers can be too aggressive pursuing price tactics while not making enough changes to the store based on understanding the new behaviors. “Adding more ceiling signs and promotional messaging seems to be something everyone’s doing today. But there’s a point of diminishing return on in-store communications. Past that point everything becomes clutter,” says Chidley. “Don’t let the economy force you to backslide into clutter. It’s a good time to get back to basics.” Lack of clutter, key items in stock, logical adjacencies and a rational traffic flow. Together, these elements make up the first fundamental of a loyalty-building shopping experience. It’s one that supermarkets and big boxes in particular have been known to ignore by filling aisles with muddled signage, pallets and displays for shoppers to dodge. “You may actually do a better job of increasing basket size by being more precise with messaging—by framing value around style or benefit stories.” To bring their benefit stories alive in the aisles, retailers can borrow a page out of the playbook for advertisers, who have always been good at reframing the proposition. You’re no longer shopping light bulbs for price, but for their ability to reduce your energy bills. Cold remedies are sold not as cures, but as ways to avoid missing days of work. Prepared meals aren’t just shortcuts, they’re healthy. Promoting a message that “you can still afford to make the holidays special,” Kmart and Sears, as well as T.J. Maxx and Burlington Coat Factory, are attracting shoppers with old-fashioned layaway programs. Customers feel helped rather than handicapped by their limited credit. Grocery chain Stop & Shop’s strategy is not to slap points, rewards or discounts on every SKU. It recognizes that many of its customers belong to a generation that never really had to work with household budgets. The grocer now teaches “affordable food summits,” advising shoppers on how to keep meals creative while controlling spending. It’s a tactic that’s relatively inexpensive, adds value and encourages loyalty through personal interaction. Talbots is hoping women will want to relieve their recession blues by going to parties at its stores, thrown by loyal customers. The company provides food and drink while helping women update their looks from its holiday line, created around the concept of how to be the perfect hostess. The goal is to build relationships which will translate into higher sales. “Store experience builds equity that lasts a lot longer and goes a lot deeper than these episodes of message bombardment and promotional frenzy,” says Chidley. “Yes, you need to give the worried brownbagging consumer reason to shop. But your brand needs to build long-term equities that matter in an up or down economy. So strategy must be informed by shopper insights if you expect to improve performance and deliver meaning to the customer.”

Ideations
A Retail Publication October/November 2008

As the economy struggles to recover, companies can do more than resort to survival mode. They can take small steps that will drive growth long term. Stores in key markets can be cost-effectively refreshed, or departments with the most potential future growth can be identified and upgraded. Behavioral insights can be deployed into the current environment to fine-tune adjacencies and new merchandising opportunities. According to Chidley, “You should be continuously auditing stores to find the places where you can add differentiated value to the shopping experience. Most retailers have already moved aggressively on reducing costs, but the fact is, prices have gone up on many consumer goods due to earlier jumps in fuel prices. You can institute strategic sourcing or rationalize inventory to free up capital. You can get more from existing sales resources by optimizing your assortments. You may even be able to rework the floor plan to make it easier for people to shop while improving the perception of service.” Despite the uncertainty ahead, companies can still find ways to keep the brand story fresh. “Some behavior changes will last, some won’t,” says Chidley. “The most resilient retailers will understand their immediate opportunities better because they have a shopper-centric point of view that allows them flexibility. Their brand character can quickly be brought to bear under changing circumstances, with less danger of diluting what they stand for.”

Chairman’s Commentary

Strong leadership and a shared vision drive growth in tough times.

Communication and Courage
has saved more companies than most of us have ever managed. And the new White House team will inherit one of the toughest turnaround efforts in history. Yes, governments and retailers alike need careful cash management, strength and determination. But they also need the spark of inspiration that will reinvigorate business. In unstable times, growth comes from leaders who inspire their organizations with ideals, not from those who simply push people to do more for less. Defensive postures tend to be boring. And just because we’ve all had to trim our budgets, react to stock prices, make layoffs and carefully reallocate resources doesn’t give us an excuse to bore people! Luckily, a direct effect of continuously communicating an authentic, meaningful message is the responding upward flow of relevant new ideas. Your story—what we call your brand narrative—is at the heart of empowering your people to make change and find fresh ways to stand out. It inspires creativity, enterprise and innovation. And of course, your brand message isn’t authentic unless your business is customer-centric. You’ve got to have your shopper’s needs at heart. If you’re stuck in the status quo, afraid to move forward until the economy recovers, it means you’ve stopped creating value. To have value, you need to stay relevant, and for that customer centricity is crucial. And so is courage. Courage to bet on the opportunities you can find in a down economy. However, you won’t hear me claim that finding growth is ever going to be a piece of cake. It’s a constant marathon, just as challenging now as it will be when the economy recovers. And frankly, it looks like the markets will remain weak for a couple more quarters. There’s a new conservatism on the horizon, in fashion, food and home-dwelling and many retailers are already altering their mix accordingly. Crowds will fill the shops on Black Friday, even though the pattern for the last several years has been a surge of spending the week before Christmas. Pent-up demand coupled with retail sales and deeper, earlier discounts will loosen purse strings after we all count our blessings on Thanksgiving. Generally speaking, tough times are toughest on the mediocre players, the companies who don’t stand for anything. I urge you to use this time to find significant ways, small or large, to use your vision and passion to pursue growth and renew shopper confidence. Thoughtfully,

When everyone is insecure and anxious from economic distress, it’s time to pull out one of the strongest business tools you’ve got—communication. Communicating the company vision tightens the emotional bonds among all your stakeholders—employees, store associates and online staff. It inspires confidence and energizes people with common ideals so they can believe in the company. And belief is a great strategy. If you want the best talent, your company needs to mean something and offer people a way to contribute to the common good. If you want loyal shoppers, your beliefs and the special way you do business must clearly differentiate you from the competition. More and better communication of your brand story through actions, answers and offerings—not just banners and posters— gives people more control and confidence in their own choices and actions. More control helps allay the fears. One guy who believes in over-communicating company values is master merchant Allen Questrom. In his recent presentation at the WWD CEO Summit, he was outspoken on the need to navigate through rough weather with your brand vision. And the need to take your vision into the future, to explore risk and to keep up with people’s changing value systems. If our presidentelect had a cabinet position for Secretary of Retail, it would be Questrom. As CEO he

D. Lee Carpenter

Ideations
A Retail Publication by
7575 Paragon Road, Dayton, Ohio 45459 P +1 937 439 4400 F +1 937 439 4340 retail@designforum.com D. Lee Carpenter, Chairman & CEO Jill Davis, Editor Mike England, Design/Production © October/November 2008

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Strategies to Keep Shoppers Shopping…in Spite of Themselves
Shoppers want to stay home. At the same time, 42% of women tell us they’ve been doing it for months, and are feeling a need to break out.
It’s hard to imagine a more perfect—or imperfect—convergence of events: the financial crisis, the US presidential elections, and the fast-approaching holiday shopping season. It’s no wonder I find myself constantly quoting Thomas Paine, “These are the times that try men’s souls.” (Women’s too.) So what to do? We can think like Chicken Little (the sky is falling, isn’t it?). But we’d better not act like him if we expect to encourage shoppers to spend over the next few months and coming year. This is a time that demands boldness, flexibility, taking giant leaps, and thinking outside that infernal box—because there isn’t one any more. Smart design, great merchandising, and sensitive messaging really matter now. Not only the lowest prices in town. Feel their Pain The same old messaging won’t work. Let shoppers know you understand what they’re going through. In our 2008 How America Shops® MegaTrends study, 60% of women said they can no longer control the big things (gas prices, home values, the grocery bill) so they’re “trying to control the little things.” Helping them is the opportunity right now. J. Crew has delivered the perfect message with its new “Just Ask” initiative. It’s relevant, authentic, has humor, and it’s actionable. “How can we help you? Introducing J. Crew’s answer to anything and everything you need. It’s simple—just ask.” (Take a look at jcrew.com.) It’s about Value and Values Shoppers want, must get the best value right now. Or else they won’t even show up. But how to do that in a way that gives the nod to their inherent concerns and values—not only value? Target’s new “This is a brand new day” campaign focuses on what shoppers need and new ways to save: the new commute (by bike), the new gym (an exercise ball), the new salon (DIY hair color), the new family room (tent in the backyard). Shoppers spirits are lifted, they can act. The message addresses their concerns about everything —their family, health, gas prices. The little things. Brighten their Day Pop-up stores are a perfect vehicle—a great way to add news, get people excited, fill an empty store in a mall, reinvigorate a dull department store, create a reason for shoppers to come more often. During Fall Fashion Week in NYC, GAP’s pop-up collaboration with icon Paris fashion store Colette made even hardened fashionistas stop and shop. Target’s Bulleseye Bodega pop-up looked like an Andy Warhol painting. Soup cans and all. Why not pop it up in the stores themselves? Grand Opening in NYC changes its theme and merchandise every three months— from a Ping Pong parlor (the table took up most of the miniscule 350-square foot store) to a drive-in movie theater where people sat in a convertible car—6 at a time —to watch the movie. This concept could fit perfectly into any space. Make Trading Down Cool In our biweekly How America Shops® PULSE, 61% of women said they feel “proud of all the little ways I’ve found to save money.” One way they’re doing this is purchasing pre-owned product. Whether it’s preowned clothes, home décor, baby furniture, toys, books or music. Why don’t retailers add a “pre-owned” department so shoppers can trade in or even trade up? Four out of 10 of women told us that they “buy preowned products if it allows me to get a brand name I couldn’t afford new.” Now that’s an opportunity. Keep Them in the Store It’s all about options today. Good-BetterBest was never more important. Especially “good.” If you don’t give them an option to trade down to, regardless of the category, then shoppers will go elsewhere. That’s what Wal-Mart is doing now. It’s not only that it’s perceived to have the

Guest Feature
by Wendy Liebmann

Wendy Liebmann Founder & President, WSL Strategic Retail
As president of WSL Strategic Retail, Wendy helps clients build marketing strategies with maximum impact on the consumer at retail, be it store, catalogue or Internet. Clients include leading global brands in beauty, fashion, health, food, publishing, financial services and advertising. Since 1989, WSL has published How America Shops®. A noted speaker, she is regularly cited by The Wall Street Journal, The New York Times, BusinessWeek, and frequently appears on ABC News, CNN, The Today Show, CBS Sunday Morning and others. Contact Wendy at 212-924-7780; info@wslstrategicretail.com.

lowest prices but it also offers compelling trade-down options that help people “take control of the little things.” Whether it’s cereal or shampoo or jeans. Beware The Hermit Factor Shoppers want to stay at home. At the same time, 42% of women tell us they’ve been doing it for months, and are feeling a need to break out. We need to find ways, however small, to encourage them to come out into our stores to buy our brands. Sure, this is a time for companies to watch costs, trim inventories, conservatively manage budgets… but in the end, this is also a time to leap forward, to be bold. No Chicken Littles need apply.

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