- In the midst of recession, a new breed of shopper is emerging. Successful retailers are having to adjust their selling strategies to keep up with savvy, cost-conscious buyers.
Young shoppers in particular approach shopping in a whole new way, from researching online to expecting an "experience" instead of just a purchase. Advertising is changing at warp speed as technology and social media create new ways to reach target populations.
"If there's one thing retailers don't like, it's a quiet cash register," said Bryan Pope, associate editor for the Real Estate Center at Texas A&M University. "Unfortunately, during the past year the flailing economy has made sales slump, causing stores like Circuit City, Mervyn's and Linens 'n Things to shut down their registers for good. Others, such as Blockbuster, are still open for business but have been forced to scale back.
"What's a retailer to do during such turbulent economic times? One idea is to think the way today's shopper thinks," wrote Pope in a recent Center article.
"People have a new relationship with money, and they are more mindful of how they spend it," said Neiman Marcus Vice President Gayle Tremblay, speaking at the latest Retailing Summit sponsored by the Center for Retailing Studies, part of Texas A&M University's Mays Business School.
Tremblay oversees the upscale department store's clearance division, which includes the Last Call off-price stores, so she has had a front-line view of the recession's impact on consumer spending habits.
"Some customers are shopping in their own closets, either finding something so old it's back in again, or bringing out special pieces that are timeless," she said. "The accessory business is very strong as a result, because you can take an existing wardrobe piece, add a new pair of shoes or jewelry, and make it look new again."
Tremblay also said the average Last Call customer is focused on the relationship between quality and price.
The shift to a more cost-conscious shopper has extended beyond department stores.
Take Home Depot, for instance. CEO Frank Blake said the recession was behind his company's decision to adopt a new corporate slogan. "You can do it; we can help" became "more saving, more doing."
"Still, consumers' careful approach to spending has resulted in declining sales and forced retailers to reduce their inventories and let employees go," said Pope.
"Retailers have been forced to re-examine how they spend their advertising dollars. This is no small feat thanks to a marketing environment in which new advertising avenues emerge and old ones morph practically every day," said Pope.
"Never in the history of humankind have people been more bombarded, more saturated and more distracted than they are right now," said Stan Richards, founder of Dallas-based marketing firm The Richards Group. "We have helped create the cynical consumer - these buyers with attention deficit disorder. They have the power to fracture a brand as fast as we try to integrate it."
Clients' advertising dollars, which used to be allocated to cover just a few disciplines, are now spread across many: online, newspaper, TV, radio, relationship marketing, product placement, sports sponsorships, branded content, ethnic specialization and promotion.
Richards singled out the Internet as the best medium for engaging a target audience in real time. Online retail, he said, was almost nonexistent in 1995. Today, 74 percent of people have access to the Internet in their homes.
Al Meyers, senior vice president of consulting firm Retail Forward Inc., agreed with Richards' assessment of the vital role the Internet will play in the future of retail.
"Online will be our fastest-growing channel of distribution coming out of this recession," he said.
The Internet has made it easier for consumers to research products before buying, and young shoppers have been quick to take advantage of this resource.
Adding a sense of fun to shopping poses yet another challenge to retailers, Pope said.
James Gilmore, author of Authenticity: What Consumers Really Want, said retailers have to create memorable shopping experiences for people - experiences shoppers will want to return to.
"We need to be doing things that are photo-worthy," he said. "So people want to take [their cell phones] out and take a picture of the experience that's happening."
Technology and the recession have created a new breed of shopper - one that is savvy, as Tremblay pointed out, but also demanding and finicky, with tastes and preferences that change constantly.
"If retailers want to keep those cash registers singing, they'll have to change, too," said Pope.
"The need to evolve along with consumers is just as critical for the real estate industry as for retail. Homebuyers, like all shoppers, are looking for better ways to find what they want. New technologies, tools and media will constantly reshape the way people buy both houses and blouses."
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