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What Do the Two Retailing Studies Suggest?

October 28, 2009


The results of two retailing surveys have come out in the last week and a half.  First was Shop.org’s eHoliday Study and second was the Retail:Next study from Dechert-Hampe and RetailWire - Fad or Trend?: Will Recessionary Shopping Behavior Continue?

In the eHoliday Study it was noted that since "many of today’s shoppers use Facebook and Twitter regularly, and because these tools are more cost-effective than traditional advertising, 47.1 percent of retailers surveyed will be increasing their use of social media this holiday season."  In the Fad or Trend? study more than 83 percent see staying connected through social media is permanebnt and will outlast the recession.  Americans like this new way of communicating.

Times have been tough for the retailer and consumer.  Retailers have reacted with free shipping for online purchases and "have created promotions and incentives to help Americans save money this holiday season."  Consumers have adopted frugality and have gone after store brands.  The Fad or Trend? study says part of this is a fad. 

"The American consumer in particular is not good at doing with less of anything," said Ray Jones, Dechert-Hampe's managing director, in a RetailWire webinar last week. "We're not very good at being frugal, like the Greatest Generation."

So once the consumer sees the recession is ending, it's back to eating out and the end of frugality.  Store brands will not fade if the consumer perceives value.  For me, Fred Meyer brands are just as good as the name brands.  The Nordstrom brand polo may be just as good as the Polo brand at half the price or even the GAP polo with no logo.

I think we can do a better job on the promotion of value.  The Fad or Trend? study says "Consumers will increasingly turn to discounters of all sizes and types as they hold retailers' feet to the fire on the value of service."  If we sell a sofa, for example, by advertising price, how does a consumer differentiate quality from one retailer to the next?  If the average sofa last eight years, does the consumer know that the cheaper sofa will come up short? 

The Fad or Trend? points out something else critical to us. The consumer's disposable income is under siege, namely because health care costs are rising faster than incomes.  "With health costs continuing to rise under the current system in the U.S., more than two-thirds see lower-cost alternatives offered at retail (i.e., in-store clinics) continuing to grow."

D'Anna Hawthorne, strategy director for MillerZell, says "trading down to lower cost alternatives is more related to circumstances." With the new emphasis on value by retailers, "We're seeing that, in-store, retailers are investing more in promoting their brands." 

That may be key for a lot of us:  promoting our brand.  In our case why should consumers come to Landfair Furniture + Design Gallery and what makes us unique?  That's a question we all need to answer.

Do you have some points you'd like to share? You can comment directly, email me at landfair3554@comcast.net or follow me @landfairfurnitu.

Posted by Mike Landfair on October 28, 2009 | Comments (1)