By Al McClain
In a wide-ranging keynote address at the recent IIR Shopper Insights conference, Marshal Cohen, chief industry analyst of The NPD Group, discussed the ever-changing consumer and how best to reach that moving target. Highlighted below is a sampling of the trends he identified:
- 51 percent of adult women in the U.S. are single – retailers need to rethink their relationship with them and provide lifestyle tips via trunk shows, in-home parties, etc.
- Kids influence the purchasing habits of their parents on almost everything –
marketers can reach adults through their kids. For example, who knows more
about cell phones or computers – parents or kids? One example of a brand
successfully doing that is Cheerios, which has four versions of their home
page – for kids, for new parents, for adults, and for families - Skin Care sales were up two percent last year but anti-aging products were up 10 percent –
and a surprising 56 percent of those purchases came from consumers 25 years
old or younger. Said Mr. Cohen, “The daughter loves mom but doesn’t want
to look like her when she reaches the same age.” - The younger generation drinks coffee and likes to dress up sometimes –
coffee sales for the 13-24 group are up 54 percent, while men’s suit sales
are up 21 percent for men 18-24 – they are separating themselves by style. - Impulse sales are dropping around the holidays due to gift cards –
retailers need to find ways to reward gift card shoppers so they will pick
up extra items when they buy or redeem a gift card. Retailers can also promote
self-indulgent items such as flat screen TV’s as “family gifts.” - With everyone “going green,” consumers don’t necessarily buy in completely to natural/organic products,
which they may think are overpriced and of questionable integrity.
The bottom line for Mr. Cohen seems to be that too many marketers are doing things the old-fashioned way – pushing too many trends and new products at consumers, without doing the “heavy lifting” of really understanding these consumers and figuring out how to connect emotionally with them.
Discussion Question: What trends from the above list do you see as most important? What should marketers do – specifically – to capitalize on them?
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One trend left out of the list: The new experience consumers have had for the last 15 years on the web. Call it Ultra Niche Segmentation. Consumers now have a vast world open to them and millions of different paths of consumption, from a specialty quiltmakers in the Southwest to Amazon.com. They go to product review sites like Consumer Reports to decide what to buy. But also listen to bloggers and belong to newsgroups.
Therefore, the biggest “old fashioned” idea is that you can market to a mass audience. It’s not just about reach. It’s the way we see ourselves. 30 years ago, you watched the nightly news. And you also knew that everyone else watched the news. All together, at the same time. Now, the world is much more interconnected, but also incredibly fragmented. We sense that fragmentation. Marketing messages crafted for some kind of hypothetical masses audience ring false. Despite a lot of talk-talk-talk, many of the biggest marketers do not have good segmented databases. What are we waiting for?
We’re looking through the wrong end of the telescope–again. Once we succeed in granulating the purchase behavior of every single person, we’ll begin breaking their “purchase days” into hourly trends and tendencies. Enough already.
Rather than trying to manage a shopper’s purchase behavior, perhaps we should consider helping them manage their own purchase behavior. For instance, media choices seem important to marketers. Once they determine a well-researched “media set” for a given demographic or psychographic group, they tend to nail it down, add it to their media algorithm, and move on. But before they can take their next sip of latte, that media set has changed in important ways. The marketers have just tried to nail Jell-O to the wall. In the time it takes to implement the aforementioned media plan, cable TV may have been introduced to part of the demographic group. Or a new radio format became popular. Or podcasting became easier to access. Or the iPhone was introduced.
Now, apply marketing media’s rapid and unpredictable changes to the other marketing factors important to your product or service and see if you have a reliable formula for selling stuff. Is rapid change applicable to the following marketing factors?: Taste, color, packaging, pricing, nutrition, size, shipping cost, seller reputation, politics, recalls, performance, and more? Yes. How many of these factors can be reliably, consistently managed, thus reliably and consistently managing a consumer? None.
“Reception Marketing” is the science and art of helping consumers manage their own preferences, and the advantages are enormous. Traditional marketing can be characterized as “Sending Marketing.” The difference, of course, is doing a lot more listening than talking–something we marketing folk do poorly. Space is limited here, but consider the possibilities.
All of them are important from a general context position. That said, retailers need to study the demographics of their individual market and store(s) and connect with the shoppers at each location in the most personalized way without being overly intrusive.
If your demographic is highly indexed to single women, then the suggestions in the article make sense; as does a social evening to meet neighbors for a social connection.
There are many things a store can do to personalize their connection with shoppers, and it starts with understanding who is walking into the stores, and then finding ways to build “emotional” bridges that bring them back for more than simply buying the stuff that’s stocked on the shelves.
We have made some discoveries in our consultative “coffee talks” groups and among them is that marketers tend to over-stereotype consumers. One of the recent discussions we had pertained to how often it seems that mature adults are completely out of touch with marketing to youths and then as a result, make costly mistakes, and how often these expensive errors are “fine lines.” In addition, “single people” are not all the same, and all do not buy the same types of goods nor have the same preferences. And there are several different buying preferences WITHIN socio-economic categories, genders, and regions. Marketing would be so nice and easy if people could be classified like horses, but it’s just not the case.
The statistic about anti-aging stands out. It’s no secret that the aging of the baby-boom generation continues to shape consumer shopping behavior, although many retailers still lag behind when it comes to store design and apparel sizing appropriate to this growing population. What’s interesting is the “rub-off” effect on the boomers’ children. If the parents want to look young as long as possible–after all, 50 is the new 30–imagine how long the twenty-somethings want to prolong their adolescence!
These are all important issues, but there are a couple that Mr. Cohen did not mention here that are worth bringing up and at least one incomplete statement.
The latter has to do with gift cards. I’m not sure, from my conversations with researchers in the U.S. and Europe, that there is any significant drop in impulse sales during the holidays. While card purchasers may only be buying the face value of a card, those who redeem them are usually spending 30-40% more than the face value. How’s that for impulse buying?
Let’s not forget that gift cards are a $75 billion business in the U.S. alone, and continuing to climb. And if you want to reward card buyers, forget about the usual lame promotions. The next step in gift cards is value-added–cards that can be used as a DVD with additional content or as instructional videos which could then spark sales of additional products. It works and there are numerous examples of it.
As to other trends, I think we have to take off the blinders and look at what’s going to happen. For example, on the ethnic front, the number of Indian and Pakistani shoppers are growing exponentially in all geographies and, because of higher incomes, are a very attractive consumer group that few retailers are addressing.
The other is the aging of the population. U.S. retailers have done virtually nothing to address changing needs of older shoppers–baby-boomers plus–who still hold the wealth.
I happen to find all of Mr. Cohen’s comments interesting and relevant. I too agree that often marketers are guilty of “doing what I’ve always done.” I believe one can argue that taking such an approach will certainly yield “less than you’ve always gotten.” So here are a few additional thoughts.
Of particular interest to me is the comment regarding Skin Care. There is business in that comment. You can see it everywhere. Americans are living longer and increasingly don’t see their age as OLD. In fact I’ve often used the analogy of Mick Jagger. How old is Mick now? He certainly would have qualified as a Senior Citizen just a few decades ago. But Mick is still rocking arenas and venues all over the world. That’s how consumers feel who are +50. No longer does this group think of themselves as Old People. They believe they are their own version of a “Rolling Stone.” There is much more marketers can do to reach, attract, engage, capture and retain the loyalty of this group. In short, they just want to be pretty!
I also found Mr. Cohen’s comments about impulse shopping around the holidays interesting. It is evident that we live in an age of great innovation. The gift card is one of those innovations. Gift cards simply make it easier to shop. For the busy person with “no time” or perhaps the person who is just not mentally focused around gift purchasing, the gift card is the solution. Wait a minute…I should say it’s today’s solution. There are many tests and ideas in incubation currently that the public at large doesn’t yet know about. One or more to those incubated ideas will become the next gift card. This points clearly to what one of the primary jobs of marketers must be. Mingle with the public or buying consumer to anticipate future needs. Understanding the “pain points” of shoppers will yield financial rewards for those of us who get it right in the next wave of innovation.
Last thought? Mr. Cohen is right and there is data to prove it.
The bottom line is that it’s up to marketers to understand consumer wants. These trends should give some indication as to what will sell and what won’t. Marketers really need to look at the whole “kids influencing everything” concept. As I watch TV with my daughter, I’m noticing more and more adult oriented products being advertised, especially with trendy high tech products.
First back to David’s comment…as a horse guy I want to make it clear that it’s not always a sure bet to ‘classify’ horses either. 🙂
Dan Burrus (www.burrus.com) is arguably the planet’s leading expert in business growth through technology. When asked to name the greatest threat to our corporations he said: “That they’ll change but not transform.” My sense is that we are tinkering and tweaking our way to tragedy.
We look at consumer research and try to ‘change’ our strategy to match every bit of information that comes our way–even if that information conflicts. We try this and try that. But we don’t learn to think differently.
“Change” refers to the fluctuations we make within our current mind-set. In other words trying to do better what we’ve always done.
“Transformation” refers to explorations and creation outside of our current mind-set. In other words finding ways to do what has never been done before. This is the territory of entrepreneurial renegades, deviants and revolutionaries.
The later is what we need. Big ideas. Huge courage. Bold decisions. Generally consumers are bored with us–heck we’re bored with ourselves. Retail needs some colorful ‘bad boys’–and ‘bad girls’!
The list points out a very important lesson. We don’t market to demographics, we market to people. With this in mind, marketers need to continually engage with the consumer, and thoroughly understand each consumer’s needs and wants, and stop worrying about catching the latest trend. Trends change too quickly, and most retailers, who act too slowly, will execute a trend after it is already waning.
There is a second lesson to be learned. Companies, whether they be manufacturers or retailers, need to make certain that they are staffed with people from all walks of life, and from all age groups. Once this is accomplished, the companies need to create a culture of idea sharing, encouraging all people within the company to voice their opinions about new initiatives. No matter how smart marketers are, there is always a new trend that is below their radar screen, but is part of the lifestyle of another employee. You can’t outsource awareness.
I am fascinated that with so much exquisitely fine detail that we have about trends, consumers, technology, logistics, branding, and all the rest, that the retailing industry performs so poorly: 91% of all retail organizations’ products and services fit their markets 70% or worse; 92% of all retail organizations have a customer service rating of 70% or worse; and 96% of all retail organizations meet 70% or fewer of all customer expectations. Improving this is surely the “heavy lifting” that needs to be done.
Single women, influential kids, staying young (anti-aging), stylish “about-to-bes”, gift cards, going green (if it’s not inconvenient or expensive). Can you separate the trends from the fads? That’s been my career’s work, and I can say, you had better.
Real trends are economic, social, demographic and technological phenomena that reinforce one another, that involve structural, institutional and organizational changes that are long-lasting, even permanent. They are not fads; they will influence and shape your business and industry for the foreseeable future. They’re important.
What are the most important trends in retail? Well, they fall into 3 broad subject areas:
1. The growing importance of the Internet, more for shopping and information collection than for buying;
2. The importance of the consumer experience, loyalty, referrals and therefore, of consumer-centricity;
3. The importance of multi-channel integration, both for consumer interface and for back-office operations.
When Mr. Cohen criticizes retailers for chasing trends, he means fads. But it’s true that the real heavy lifting of understanding consumers–achieving true customer centricity–means individualization, mass customization, and markets of one.
This strategy has now become available to all retailers because of advances and affordability of various technologies. Retailers should devote themselves to understanding and serving their consumers, and avail themselves of the tools to do it.
The answer to what trends are most important are found in the marketplace every day. If one looks at which retailers are having the greatest success at attracting and keeping customers, you can find out what trends are important. Visit a store like Coldwater Creek or Chico’s and you will see how these retailers have become successful serving the needs of baby-boomer women. With the proliferation of cosmetic and skin care retailers serving this same consumer, it’s easy to see the growing importance of anti-aging skin care products.
Visit any Starbucks and one can see how younger consumers play an important roll in the growth of coffee drinks. And walk through nearly any store where there are moms and kids shopping together and you will readily see just how much influence kids have on a wide variety of products.
The business of trend tracking begins with a great deal of in-store observation. Real trend tracking cannot be effectively accomplished in an office. The answers to everyone’s need to know more about what consumers are doing and what they will do in the future are taking place in stores every day.
Examining the first two findings reveals a need for “transformation” rather than “change.” Cheerios has a separate web page for new parents, adults, and families. An adult could fall into all 3 categories: be an adult with a family who has just has a new baby! That adult could be one of the 49% of women who are married. That adult could also be one of the 51% of women who are single (which could include a divorced or unmarried woman with a family who just had a new baby).
So how do three separate web pages help? We know that consumers are fragmented into many groups and that their classification changes by group. Creating groups that are neatly described by demographics is an old idea; tweaking the descriptions of the groups is just tweaking. What is needed is transformation–a new way of identifying valuable consumers and generating insights that lead to an understanding of what they want, when, and at what price.
Certain “trends” cited by NPD appear to be several generations old. Kids influence the purchase of Cheerios? That’s new? Men’s suit sales rise when unemployment (underemployment) rises? The increased numbers of single women? People don’t like paying premium prices for organics?
I agree with Mark. A lot of what the list references seems to be based on older research. Kids have always had a profound effect on the purchasing habits of their parents.
The important thing to remember in this case is that trends always change, short term and long term. Retailers need to get much more specific if they are going to stay on top of their game.