Everyone’s talking about the new consumer. But has the consumer really changed? If so, how, and what does it mean for our industry?
I put those questions recently to two executives at WSL Strategic Retail, big-gun strategists and futurists who work with Wal-Mart, Target and other major retailers as well as publishers within our industry (Hearst, Conde Nast and Hachette, to name a few). Wendy Liebmann, CEO and Chief Shopper, and Shilpa Rosenberry, senior consultant, shared their insights and information from their just-released How America Shops 2010 Megastudy and their How America Shops Everyday study. Here’s what they had to say.
- Yes, there definitely is a new consumer. They have a whole new sense of value and new habits formed during the recession. Quantifying value is key at all price levels now including luxury.
- The new consumer is still uncertain. Technically the crisis is over but there remains a great sense of fear. More than half of women in the study believe their own personal recession will last another year or two. And 43% said it will be another three years or more before the recession ends. They are in no rush to make major purchases.
- But at the same time, they want to shop, especially for their home. So there are two conflicting parallel trends – fear and pent-up demand. A growing number of consumers are tired of cutting back and are ready to splurge.
One in five say they’re “tired of watching every penny I spend and are ready to splurge.” Of those, 30% are ready to splurge for appliances or furniture. That has jumped from 20% in October 2008. This sentiment is highest among older shoppers, 55+. In that age group, 38% are ready to splurge on their homes. The bottom line is to expect a slow but steady increase in business as the mixed sentiments work themselves out.
One thing consumers “liked” about the recession was that it gave them a reason to stay at home and be with family and friends. That’s something they want to keep.
- Men are more confident now. Although cutting back, men are far more optimistic than women about their current and future financial situation. Ten percent think the recession is already over, versus only 4% of women.
Men today shop more than men of a generation ago. So it’s important to get them involved in the kitchen or bath decision. Why not start a series of men’s cooking seminars, maybe focusing on grilling and sports events?
- Quantifying and demonstrating value is paramount today. Demand must be created, aggressively. The consumer attitude now is: “Convince me why I need this. Otherwise I’m not showing up.”
In the good old days, we could demonstrate value by citing how much a kitchen or bath added to the value of a home. Now we have to get more creative.
Instead, find out from a real estate pro how much faster a home in your area sells for with a new kitchen or bath. Which improvements count for the most?
Can you put a number on the long-term enjoyment of a new kitchen or bath? If someone invests $80,000 in a project and stays in their home five years, they’ve spent $44 a day for an improved lifestyle. At seven years, it’s $31 a day.
Green is important, but only if you put a value on it. How much money will someone in your market save with a more efficient refrigerator over the next five to seven years? How much will they save with a more efficient dishwasher, shower, toilet and washing machine? With improved lighting?
How much will they save if they can keep food fresher longer? A study from the University of Arizona, along with internal research from Sub-Zero, for example, suggests that the average U.S. household throws out well in excess of $500 worth of fruits, vegetables, leftovers and other food every year due to spoilage.
If a new kitchen encourages more at-home meals, that can be a savings. Cutting out $50 a week in restaurant meals or take out saves $2,600 a year or $13,000 over five years. Get your calculator and figure out other savings.
If your state offers any rebates or “cash for clunkers” type programs, be sure you understand them. Tell prospects if prices come down on any of the products you offer. Stress the value.
But remember, too, that selling has to relate back to the emotions. So you also have to always be helping prospects envision their lifestyles, and the benefits of spending time at home with family and friends.
- Bundling brings value. Wal-Mart had great success with its packaging of Home Game Night, a value package of easy meals, snacks, DVDs and games. Can you apply the same principal with a prep center package, a sink with all the accessories such as cutting board, baskets, etc.? Or an entertainment center package that includes an icemaker, bar sink, cabinet for glassware and wine fridge? What about a clean-up center that includes a dishwasher with compactor and recycling cabinets?
- Technology and innovation sell now. This is one category where consumers are willing to spend, providing it’s true innovation. Hands-free faucets, simple but technologically advanced cooking, mirrors with TVs in them or remote controlled toilet seats are good examples of this.
- The importance of brand has changed. While the importance of brand varies by category, consumers are not thinking so much about premium or designer brands. Shoppers don’t want excess or over consumption. They want to feel responsible and as though they are getting the best value. In some categories, they have traded down to mid brands and found they are perfectly satisfied. So don’t assume there are any must-have brands in the kitchen or bath equation. Prove the value of the brand.
- Social media and online count more than ever. According to How America Shops Everyday, 37% of those surveyed use the Internet primarily to get information on products and services before buying in stores. For that reason, an up-to-date and compelling online presence is critical. Part of that is community, social media and online reviews and success stories.