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VOLUME 19 ISSUE 01 • 2011

TIME TO EXHALE? SORT OF...

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THE RECESSION IS NOT OVER

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NEW SHOPPER PLAYBOOK

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FIRST SHOPPERS

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BUT SHOPPERS MOVE ON

EMERGES

TO COME BACK

LESSONS LEARNED;

INSPIRATIONS OBSERVED

WHO WOULD HAVE IMAGINED IT?

HAPPY EVERYTHING

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TIME TO EXHALE? SORT OF…. We made it through the 2010 holiday shopping season in relatively good shape. People shopped (albeit with lists and lots of coupons in hand). Inventory was turned. Discounts were abundant but planned so retailers didn’t give away the store. In the end, it was a season for most retailers to be satisfied – especially luxury retailers, deep discounters, food and online retailers. Is this a sign that our consumer-led economy is back on track? A sign that Americans will now spend consistently rather than their roller coaster behavior of last year? A sign we can now exhale and move on? The answers: Sort of, no and yes…

THE RECESSION IS NOT OVER BUT SHOPPERS MOVE ON In our new study How America Shops® FUTURE SHOP 2011-2012-2013 published in December, shoppers were resoundingly clear: two-thirds said the recession (their recession) would last three or more years. Half said their personal finances would take at least one to three more years to improve, while four out of 10 said they had no idea when. Certainly doesn’t sound as if we can exhale any time soon. And yet… …Shoppers are moving on. In fact, let’s erase “recession” from our vocabulary because shoppers have accepted the new reality of their lives and are moving forward – and fast. They’re utilizing all the lessons they learned in the last three years to shop smarter.

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This past holiday season showed how they’re doing it. They made lists, checked prices be© WSL MARKETING INC. 2011

fore they shopped, used the Internet as both shopping tool (for information and discounts) and shopping place, spent within their means so they wouldn’t get into debt again, bought mostly what they needed, and a little of what they wanted. And that’s exactly what we can expect from them in the year to come.

NEW SHOPPER PLAYBOOK EMERGES Their shopper playbook is clearly defined: 72% n ow pay more attention to price on just about everything they buy 64% look online for the best prices and discounts before going to stores 61% m  ake shopping lists to avoid overspending 60% s tick to brands and stores they can afford for most things they buy 57% u se more coupons now than they did a few years ago, and 54% are willing to try products that cost less Source: How America Shops® Future Shop 2011, 2012, 2013, December, 2010

For every company, retailer or manufacturer, in any category, future success will be based on the following: 1. Substantiating the value of everything you offer shoppers 2. Creating ways to be part of the shoppers’ savings culture 3. Developing ways to get on their shopping list -- for needs and wants 4. Validating why you are worth the price and the trip 5. Using the Internet and digital tools to provide information, service and shopping opportunities -- every day


VOLUME 19 ISSUE 01 • 2011

6. Recognizing shoppers are in control, and rewarding them for that, especially Mom

WENDY LIEBMANN | CEO will speak at:

01.25.2011 FMI MIDWINTER EXECUTIVE CONFERENCE LOCATION:

The Arizona Biltmore Phoenix, AZ 02.06.2011 NACDS REGIONAL CHAIN CONFERENCE LOCATION:

The Ritz-Carlton Naples Naples, FL

Lanvin and H&M collaboration

FIRST SHOPPERS TO COME BACK A positive sign is the (slowly) improving optimism of three traditional economic optimists, Men, Young and Affluent, plus the growing confidence of Minority shoppers. Men are more confident about their finances: 46% say their finances have already improved or will within a year compared to 34% of women. (Did they forget to tell their spouses?) Younger shoppers are no longer as worried, even if they still can’t find a job: 54% of Millennials (18-34 year olds) expect their finances will improve within a year compared to Boomers and Seniors who remain very concerned about their future. No surprise, higher income shoppers are more confident about their financial future than middle and lower income. Hence, they shopped with gusto over the holidays and will continue to lead the way in 2011 -- but with restraint. Even they don’t want to get into debt again. Even they recognize a good deal. Even they want to be smart shoppers. The real surprise is African American and Hispanic shoppers. Over half say their finances will improve within the year compared to only 34% of Caucasians. Not because they are more confident about the economy but because they have paid down their debt. They feel more in control of their finances and so are willing to spend again, albeit cautiously. The key is to keep these shoppers spending even as unemployment remains high and gas prices rise.

LESSONS LEARNED; INSPIRATIONS OBSERVED Ugg & Jimmy Choo collaboration

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© WSL MARKETING INC. 2011

As we begin the year, we enjoy the luxury of looking back to go forward. In October, in The EDGE, we offered some first thoughts on

what “forward” looked like. We noted a new FLAT retail world and how it is fast changing the retail landscape. “Consider how people shop today. They no longer shop vertically -- trading up and down by brand or retail format based on their income or experience. Now, they shop horizontally. The recession and technology have fueled a FLAT retail world where shoppers have total (horizontal) access to search out new places to buy, new ways to save, and new information to ensure they don’t make mistakes when they spend their hard-earned money. There are 3 layers to this FLAT retail world. On the surface, shoppers skim across all formats, options, brands, in their quest for the smarter buy. Floating above the surface is a technology cloud: a parallel world (the Internet, WiFi) that provides access to all, any time, anywhere (e.g., a smart phone used in-store to check prices, obtain information about a product, that drives the decision to buy or not, on the spot, in the aisle). Hovering below the surface, there’s the third layer: the social shopping world where consumers talk, listen, share, opine and take control of brands, stores, what they buy, from whom, or not.” Fashion, Beauty and Food are categories where this new FLAT world is already most pronounced. Inexpensive “fast fashion” retailers, such as H&M, Forever 21, Zara, Top Shop, continue to force traditional fashion retailers (department and high-end specialty stores, and popular-priced chains like GAP, Ann Taylor, Talbots) to innovate more and faster, and reassess their value proposition. High-end brands are learning to compete by going more mass. One strategy is alliances that enable a brand to gain broader reach, e.g., Lanvin’s recent collection for H&M and Jimmy Choo (of sky-high heel fame) with UGG (the Australian footwear brand). Pure play online fashion retailers such as


Net-A-Porter, Google’s boutiques.com and Zappos are transforming the service experi-

And homewares big box Bed Bath & Beyond is testing a L’Oréal Beauty Boutique in one of its NYC stores. And so it goes – FLAT and beautiful.

Consider how FLAT the Beauty world is now. Retailers of every type, including Payless Shoe Source, now offer beauty products, or plan to.

In last month’s issue of The EDGE, we noted how Food had become a shining star in the FLAT retail world, and gave you examples of how it was being presented to great effect beyond everyday need to drive everyday wants. We’ve added one more retailer to our list of food innovators this month.

ence, forcing traditional retailers to quickly improve their online and in-store experience.

Talk about FLAT Beauty: Sephora, the specialty retailer, has become the incubator of beauty, chaperoning such brands as Tarina Tarintino and Tokidoki to success. It has added a spectacular new store-wthin-a-store concept for MAKE UP FOR EVER in select Sephora stores. It provides JC Penney with beauty “cred” with Sephora Inside JC Penney. And it revolutionized beauty shopping with Sephora.com, one of the best and most shopped beauty stores – brick or virtual.

Make Up For Ever in Sephora

Prestige retailers have finally recognized the FLAT beauty world. Bloomingdale’s led the way, redesigning its beauty department, added more affordable brands, emphasized hair (Bumble and bumble), and created more self service (Clinique offers shopping baskets so you can shop as in a drug store). Macy’s has added assisted self-service Impulse Beauty departments featuring more affordable brands in select stores. UK Selfridges and France’s Galeries Lafayette reinvented their beauty floors with designer dazzle as well as more popular-priced brands and services. Mid-tier department store Kohl’s just announced it would add a new cosmetics line from designer Vera Wang to compliment the retailer’s exclusive Simply Vera fashion line.

France’s Carrefour, the world’s second largest retailer after Walmart, recently opened a new concept called Carrefour Planet with a stunning upgrade of its food (and beauty) offer. Beyond its usual mouth-watering fresh produce, seafood, meat, cheeses, wines, it now includes an expanded “Le Bio,” organic and natural products, an alliance with Picard, the French frozen food company (yes, the French do eat frozen entrées), and more. It has enhanced its broad hypermarket presentation, created a better, more shoppable experience, and continues to emphasize its big box value message. The next category to be flattened will be Health. It’s ripe for it. The economics and politics of health means more Americans will soon have health care coverage, and more will have to take care of their health and that of older family members. As a result, more companies will see the potential to innovate in this space.

As global retail strategists and shopping futurists, we at WSL/STRATEGIC RETAIL are recognized for our ability to turn shopper insights into smart actionable strategies. Since 1989, in our HOW AMERICA SHOPS® studies, we have tracked the mindset, attitudes and behaviors that shape shopper trends, successfully predicting how they transform brands and retailers throughout the US. Check out our database at... www.wslstrategicretail.com For more info, contact us at: PHONE

212.924.7780

FAX

212.924.7608

EMAIL

info@wslstrategicretail.com

Carrefour Planet Organic & Natural and Beauty department

Already we’re seeing it. Insurance companies, such as Empire Blue Cross & Blue Shield of Florida, are opening health clinics, regional drug chains, like North Carolina’s Kerr Drug, Canada’s Rexall, and independent drug stores are expanding health services, specialty retailers, such as Max Wellness, are adopting a holistic approach to wellness, and food retailers like Wegmans have broken down the walls between grocery and pharmacy offering healthy food right in the pharmacy.

No part of this publication may be reproduced without written permission from the publisher.

© WSL MARKETING INC. 2011

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VOLUME 19 ISSUE 01 • 2011

is published by WSL STRATEGIC RETAIL

1 yr. Individual Subscription $300 2 yr. Individual Subscription $500 1 yr. Corporate Subscription $3000 2 yr. Corporate Subscription $5000 Send check to: WSL STRATEGIC RETAIL 307 Seventh Avenue, Suite 1707 New York NY 10001 CEO/EDITOR ART DIRECTOR CONTRIBUTORS

Wendy Liebmann KC Chung Kimberly Charles Candace Corlett Randi Fater Melissa Krantz Paul Menichelli Elizabeth Neagle Shilpa Rosenberry Peter Silsbee Peggy Wang

We have lots of tools, research, shopper insights to help you. Drop by to find out more... www.wslstrategicretail.com

© WSL MARKETING INC. 2011

Chain drug stores, long the domain of all things health, are now being assailed by the most obvious (mass merchandisers) and the least (all of the above). And shoppers will drive it all.

lowers -- and the leverage to do it at a great price. Smart...and FLAT.

Welcome to the FLAT world. Are you ready?

Our heartfelt thanks to clients and friends for helping make 2010 our best year ever. We wish you the best of everything in the coming year. One last thought from Vogue magazine’s Lynn Yaeger. She’s writing about fashion but her thoughts are relevant to all of us.

WHO WOULD HAVE IMAGINED IT? If you still doubt we are moving into new retail waters, consider… American Airlines sent a holiday thank you

card to customers. An airline saying, “Thank you”… what next?

Gilt, the online sale site, offered three 2011 Jetta cars for $5,995, way below the retail price. All proceeds were donated to Dress for Success, the not-for-profit organization that

provides business attire to low-income women entering the workforce. Talk about 2011 relevance – the confluence of a new retail format offering a great deal for the better good. The New York Times and Zagats (the restaurant review guide) are selling wine to the newspaper’s readers. They have created a wine club where members buy wines from around the world at great discounts. The companies recognized they had the credibility to sell this non-endemic category to their fol-

Do you know where your shoppers are?

HAPPY EVERYTHING

“The recession…changed the way people think about getting and spending… Women are increasingly unembarrassed, even proud, of how they mix inexpensive finds with luxury items… For a global brand to stay relevant, it has to be open to all kinds of adventures… a real desire to become involved in a wider retail world, be it through online shopping, or live-streaming runway shows or collaborating with lower-end chains…” We wish you “all kinds of adventures” in 2011. See you from The EDGE,

NEW REPORT FROM WSL/STRATEGIC RETAIL • Internet Survey, National sample of 1500 adults • Analyzed by Gender, Generation, Income Group, Ethnicity • 21 Channels | 44 Leading Indicator Categories • Analytic Cells & Workshops also available For more information, please contact us at info@wslstrategicretail.com or 212.924.7780


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