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Posts Tagged ‘retailers’

I was recently in a meeting where a comment was made that I looked the part of a CEO. I was wearing a navy suit, white shirt, striped tie and black shoes. What I consider to be appropriate business attire. The meeting took place in San Francisco and I was in the company of people dressed in casual business attire. San Francisco, the home of  The Gap and of course Levis,  has led the country over the years in thel movement toward casual business attire so I was not surprised that mine was the only suit in the room.

I have long advocated that people in the conduct of business, should dress accordingly. I am probably considered a traditionalist in that sense, but I have seen the effects on businesses where casual attire, has resulted in casual performance of the enterprise. I have fought the trend toward casual business over the years to the point of initiating dress codes that require appropriate business attire including, suits and ties for men and appropriate professional clothing for women in businesses that I have led.

A CEO recognizes, that the appearance of  associates and team members is a function of the pervasive culture within the organization. A serious business requires focused and disciplined associates, if it is to be successful. The tone that the CEO establishes by dressing appropriately in business delivers the message that we are a focused team prepared to be successful.

In my experience, I have found that though there may be a few disgruntled associates on the team when business attire is required, the majority of team members will rcognize that the bar has been raised and choose to respect and appreciate a disciplined culture that will accelerate their path to success.

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The current economic recession,  has awakened a desire for many consumers to embrace  a back to basics  lifestyle, as our political leaders continue to prepare the nation for the Age of Austerity, by hypeing dismal economic news and lowering recovery expectations.

As corporations around the globe,  wrestle with the implications of a deepening recession and implement their own back to basics plans,  consumers are altering their behavior by spending less, seeking greater value and saving more.

Who will the winners be and what trends can we expect in this new consumer environment ?

 Banks will see savings grow as a reluctant investor class that has lost faith in the stock market returns to a least risk portfolio.  The very institutions that were principal catalysts in the financial crisis that contributed heavily to the recession,  will benefit, as billions flow into low cost savings accounts.

Savings clubs as opposed to investing clubs will become the new rage as people compare their spendthriftness and brag about their latest value purchase from WalMart or Costco.

Family nights will become popular. With less money to spend and more meals eaten at home,  parents will incorporate more family activities into their week. Social networking will continue to expand to a point where entire families present themselves to the world on new family oriented sights and spend their evenings surfing without ever getting wet. 

White table cloths, will give way to more buffets and value meals,  while comfort foods (  beef stroganoff, pot roast, grilled cheese sandwiches ) will rule the kitchen,  providing  big wins for marketers like Campbell’s, Con Agra and Kraft as soups, canned foods and Velveeta find new fans. Kids may even become familiar with Betty Crocker as they learn their way around the kitchen.

In  retailing, WalMart , will continue to benefit from a value consciousness that will permeate consumer decisions over the near term as consumers delay major purchases. Retailers will also look to increasing their bond with consumers by increased promotion of their own signature brands.

It remains to be seen,  whether or not consumers have the discipline to fend off creative marketers over the longer term and ultimately,  as an economic stimulus winds its’ way through the economy and consumer confidence normalizes, if they will return to the carefree, spend easy days of the recent past.

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As an era of pretension gives way to the Age of Austerity,  saving has become the new spending. As the economy tumbles,  unemployment rises and the media is filled with tales of the excesses of the easy credit economy of the recent past,  consumers are becoming as attracted to saving as they once were to spending.

Marketers, have long benefited from the impulse purchasing consumer and their attraction to the latest trends in apparel, gadgets, automobiles and even housing. Think McMansions, iphones and SUV’s as an example . Today the hot new trend is saving and buying right.

The same gratification that consumers derived by rushing out and maintaining the status quo by purchasing the latest and greatest gadget, or dining at the hot new eatery of the week, will now be replaced by the satisfaction of watching their new savings account grow, while they dine at home on a convenient heat and serve entree enjoying their latest shipment from netflix.

 Americans have always valued a deal,  but in today’s market,  the value conscious consumer has emerged at the top of the consumer pyramid and will exercise a more disciplined, patient approach to their shopping experiences,  that will create new opportunities for those marketers that are savvy enough to recognize the trends. 

This new disciplined approach by consumers was evident during the most recent Holiday season as consumers continued to delay purchases,  while retailers discounted and then further discounted prices. Traditional winners in a receding economy like WalMart were even impacted and surprised by this new consumer.

It remains to be seen if the savings trend is temporal for the American consumer or presents a sea change in the American consumer psyche. What is evident,  is that there will be winners and losers in the near term as retailers and marketers adjust to a new market reality.

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Expect retailers to continue deep discounts into the New Year as they attempt to unload inventory on consumers, that have exhibited significant restraint during this holiday season, holding  onto their dollars with a tighter grip than seen in recent years.  

This is the time of year, where historically, retailers have unloaded inventory that has collected dust on shelves and accumulated in backrooms and warehouses. This year these clearances take on a greater sense of urgency given the impact of the current economic recession on the retail industry.

As I wandered through a fashionable mall in Phoenix to browse at the offerings of various retailers, I viewed numerous promotion vehicles promoting discounts on merchandise of as much as 70% off. The stores were filled with shoppers however, there were few bags in hand as shoppers picked through racks and shelves searching for bargains.

Much of the merchandise available was clearly marked down from previous mark downs in an effort to push it out the door however, I noticed that particularly in apparel that the selection of popular colors and styles seemed to be very limited. Many of the racks, shelves and display tables featured odd sizes, colors and fashions which at any price seemed overpriced to the more discerning consumers of 2008.

The reluctance to purhase by many shoppers may be a result of retail buyers failure to create a compelling reason for shoppers to buy beyond deeply discounted prices. The Age of Austerity, that  began with the steep rise in fuel prices over the summer and accelerated through the financial crisis, market crash and auto bail outs has by necessity given birth to a more disciplined and cautious consumer.

Retailers, will need to refresh their brand and differentiate the merchandise and services they offer if they are going to succeed, with a disciplined consumer, that after decades of consumption, may find saving more appealing in the new year than spending.

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