NAVIGATING THE CHANGING CONSUMER

BY DEBRA HAZEL

high,” Cohen observed.

Another effect was a concentration on quality over quantity, as consumers bought fewer items but were willing to invest in them, raising the dollar sales but lowering unit sales. And now, for categories such as activewear, consumers are in replacement mode, only purchasing what is needed. The good news is that retailers can plan for this to a degree.

“The average life of activewear is two years. Televisions are the opposite, with a replenishment cycle of five years,” Cohen said.

“There are opportunities.”

Some sectors, however, continue to benefit. Surprisingly to some, prestige beauty products did well during the pandemic as consumers engaged in selfcare (and saw themselves on screens for hours every day), and it continues to grow as socialization has returned.

“Beauty is the only industry with both positive dollar growth and positive unit growth,” Cohen said.

Some COVID-19 effects linger. The supply chain shift of the early pandemic continues to haunt the industry.

“We went from dramatic shortages to incredible overages, so we had to go through a very aggressive promotion period. They did a very good job of going through it quickly,” he said.

And that means there is less merchandise in each store. That may be great for margins, but bad for excitement and bringing customers back in store.

“We have bored the consumer to death,” Cohen said. “There is now 70% less new product existing in stores today than pre-pandemic. We created the problem of lack of demand because there’s nothing new.”

The result is that retailers are focusing on grabbing market share, and then looking at margin, using every bit of technology they can to maximize sales and minimize promotions.

“How do you create an environment where the consumer wants to engage?” Cohen said.

Technology can help, said Dave Mustin, vice president, strategic consulting at Marcum Technology, a subsidiary of Marcum LLP. Traditional advertising just doesn’t cut it anymore.

Geolocation marketing, which collects a shopper’s location (though not identity) via a satellite or cell tower, can help retailers determine what a consumer finds interesting.

“If they’re smart, they might have tech laced throughout the store to know what they’re looking at,” Mustin said. “They then have the opportunity to encourage them to complete that transaction. That in-store activity is now an instrumental part of consumer engagement.”

Artificial reality, he said, is the next game changer, with artificial intelligence using models to build accurate shopper profiles.

“Marry that with probability analysis and you’ll start to figure out what people will do,” Mustin said.

Other, even newer, tech can be of interest.

“Chat GPT is just scratching the surface of what is possible. The revolution is just starting,” Mustin said.

On the positive side, the employment picture is still healthy, with close to two jobs for every person looking. But consumers are once again racking up pre-pandemic levels of credit card debt.

And remote work remains a factor. Prior to the pandemic, Cohen noted, about eight million people stated they worked from home full- or parttime. During the height of the pandemic, 88 million people worked remotely at least some of the time. That number has now declined to about 39 million but likely will not return to pre-pandemic levels.

“That impacts what we buy, when we buy and how we buy,” he said.

And retailers have to promote to older consumers, including boomers and millennials.

“You have to start to look at how you relate to the industry you’re in. This is a dramatic shift,” Cohen said. “You have to think where and when the growth is going to come from. Find ways to partner to create new and exciting products. The consumer is extremely resilient — they will buy what they need and what they want.”

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