While travelling to the National Association of Retail Marketing Services (NARMS) conference in Tampa, Florida, I noted that the retail sales data in US media points to a retail led recovery, even if other parts of the economy haven’t yet caught up.
I took the liberty to travel along Interstate highway I-10 across Arizona, New Mexico, Texas (a very big state!), Alabama, Louisiana, Missippippi and Florida with my UK-based brother on a pair of Honda Goldwings.
And as we rode it was evident in all the innovative stores, from huge Bass Pro outdoor lifestyle stores through to shiny HEB, Publix, Walmart and Sweetbay grocery stores, that Americans are spending again. They’re just doing it in a very different way than before.
In the conference itself, the CEO of America’s largest private company and premium grocer retailer Publix, Todd Jones asked who in the 500-seat audience had changed their shopping habits since the GFC; 60% raised their hands.
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Proof at store level? Within his stores, and as a 31 year veteran of retailing, he had never seen such a high redemption rate for coupons, or BOGO (buy one get one) promotions as he did last year and this has continued through to today.
Core value worldwide has become the base proposition, with Walmart advertising price roll-backs, in a similar fashion to their UK arm ASDA and our own Woolworths. This has been done just to allow us, the shoppers, to put those retailers on our list of stores we might visit. What we’re saying is “if you aren’t giving me real value, I won’t enter your store,” or “your store won’t be in ‘my consideration set’,” in marketing parlance.
The same is true across all aspects of US consumption, with manufacturers and retailers going hard to put their brands and products in front of us sometimes for the first time, or often because we haven’t shopped them for a while… “so come and see the difference in our value”.
And value isn’t just about base price – the same for less. It’s also about giving more for the same. As an example, Ford is going hard up against foreign manufacturers to show how much more you get in options, for the same price. This is not just on TV promotions, but right down to the dealer’s floor.
But at the independent retail store level and small business level, things aren’t quite so bright.
If you didn’t have a serious service or product differentiator when the GFC started, you are no longer in business. Hundreds of thousands of businesses are closed up and gone. As one small business owner said to us “my business is a lot skinnier than it was but I am still on the journey. It’ll fatten up now as people start to feel secure and spend again.” A strong next holiday season is very important to these independents.
There is a genuine feeling among senior retail industry execs and thought-leaders that US shopping habits have changed forever – and probably for the good. I have to say I agree on both points, but not in a sad or negative way.
Pre-GFC, many companies, manufacturers and retailers alike solved their rising payroll “problem” by raising prices. Our “payroll” if we kept one, isn’t growing anymore, so we can’t afford to shop where prices are high. Now true and genuine productivity efficiencies in everything a manufacturer or retailer does is driving downs prices, or allowing us to buy more for the same.
We’re thinking our way to lower inflation and lower prices, and that’s a good thing.
I’ll share with you some of the details from the expert speakers at NARMS, including Professor Nancy Wong from the Kohl Retail Institute at the University of Madison, over the coming weeks.
In his role as CEO of CROSSMARK, Kevin Moore looks at the world of retailing from grocery to pharmacy, bottle shops to car dealers, corner store to department stores. In this insightful blog, Kevin covers retail news, ideas, companies and emerging opportunities in Australia, NZ, the US and Europe. His international career in sales and marketing has seen him responsible for business in over 40 countries, which has earned him grey hair and a wealth of expertise in international retailers and brands. CROSSMARK Asia Pacific is Australasia’s largest provider of retail marketing services, consulting to and servicing some of Australasia’s biggest retailers and manufacturers.