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Archive for January, 2009

When Is Good News Not Good News? When It's In The News

wsjWhen is good news not good news? It all depends.

I read with great interest the first line from yesterday’s Wall Street Journal, “U.S. home sales registered their biggest monthly jump in nearly seven years in December, as cratering prices began to draw out more buyers and several major housing markets showed some signs of stabilizing.”  

All we’ve heard over the past 36 months is how many unsold single family homes are on the market and until they start moving, recovery is out of the question.  So, I would think that headline news from yesterday would be welcome. increase

Except of course I was reading the news.

Right after that, this from Richard Moody at Mission Residential, “Lower prices and lower interest rates will help sales to some extent, but the dismal condition of the labor market will remain a considerable drag on home sales over the remainder of 2009.”

Or how about this from Guy LeBas with Janney Montgomery, “Don’t jump out of your chair and call your real estate agent quite yet — we’re talking about the start of a trend that will likely play out over the next six months, not an instant fix.”

You can read all of the, “yeah..but..” comments at the WSJ site.  On second thought, maybe not.

For if you did, you’d think there’s absolutely no good news in the fact more homes were sold in December than in the past seven years.  

It isn’t Obama or Wall Street that’s wrong – it’s the people that have gotten a bigger mic to spread their lack mentality and glass half-full gospel.

I saw Rush Limbaugh’s interview quote on the monitor as I left MSNBC studios last Thursday morning, “I hope he fails.”  

I immediately felt, “How in the world do people like this get air time?  Does he get if Obama fails WE fail?” I quickly realized – of course he does.  

So why does he say it? It was a calculated outrage.

People will quote him, his fans of snarkiness can take comfort, he can clarify his quote on more interviews and his sponsors get to sell Depends. 

The battle for retail will be between your ears in 2009; garbage in – garbage out. 

When America gets tired of the “it won’t work” or  “worst is yet to come” comments, we’ll recover the best part of America. Until then it seems these folks are finding an even bigger audience.

New Products At NRF Big Show's Sonic Bar Experience

Creative Communications

David Weyher from Creative Communications

At the Sonic Bar Experience Store I found this kiosk with a screen for Virgin and rep David Weyher who took me through the concept from  Creative Communications.  Direct mail provider Mail America partnered with this company to integrate a direct mail piece that is trackable.

It starts with a personalized card card sent to a targeted list.  In this case the offer was a contest with a discount for bringing the card in.  Nothing particularly new about that you may think.

Once you got to the kiosk, you scanned the bar-coded direct mail piece to check if you won, (everyone wins something.)

After it tells you that, it offers for you to signup for a reward card and could do the same with a store credit card.

Direct mail has always struggled with redemptions and the codes usually are so generic any employee can add it to any sale.

The beauty of this to me was the fact it’s individual bar code could tie into your POS and you could see the average check of those who redeemed your offer.  You would stop multiple redemptions because it is checked against the mailing list.

Also,  you could easily capture their information for your own database.  This is important because a paid list only lets you use it once unless the customer signs up.  In the old days that meant a dedicated person had to manually enter that information which rarely if ever was done.

This would be perfect for a big store like Virgin, probably not so much with a smaller store format but time will tell.

Another product at the Sonic Experience Bar was KeyRingThing which combines 6 loyalty cards onto one wallet card.  keyringthingThe customer sets up an account online, registers up to 6 loyalty cards and they get a plastic card with three on the front and three on the back.

The cards are free because they are targeting selling the ad space at the top to larger companies like Coke, etc.

Watching people’s reactions to the product, looks like there is interest.

Finally, if you are pursuing a green strategy, what do you do with your paper receipts?  Apple emails them to you but not everyone is open to giving their email address out.  Jayson Lowe, Executive Director of Alletronic has a new idea. 

Their focus is to stop the 9 million pounds of paper used for paper receipts. Their facts are a bit startling: a single big box store will use enough trees to encircle the globe twice. More details for retailers here. 

Here’s how it works for customers. Register any of the credit cards you use to purchase items, choose from retailers who are part of the program and every time you make a purchase, your receipt is emailed to your Alletronic account. No more paper or looking for receipts. Getting the word out may take some time but it definitely is where we are going.  

I promise the financial stuff tomorrow.

Most Overused Words At NRF's Big Show

Four of  the most over-used words/phrases by presenters at the National Retail Federation’s BIG show in New York this past week:
silo1) Silos.  Apparently every department is now referred to as a “silo” that needs to be broken down because they are all so isolated.  No wonder so many big retailers are in trouble.
2) Customer Centric.  This term has been around awhile.  It is a buzz word for capturing and analyzing all the data you can from your customers; demographics, where they are in the life cycle, shopping basket, et al. From that they can more accurately predict buying behaviors- though these assumptions have not been reevaluated since September.
kool-aid3) Yes, I drank the Kool-aid.  It made several presenters sound a bit delusional. I mean, didn’t the ones who “drank the Kool-aid” at Jonestown all die?
4) Fundamental shift.  Tracy Mullin NRF’s CEO mentioned it twice, so did Wal-Mart’s Lee Scott along with a couple others. That a “fundamental shift” in consumer behavior during the holidays meant it was all about price as a lifestyle choice.  Please people – it’s been three months, not three years.  Retail sales excluding autos and gas dropped a bit over 1%.  Let’s not jump to conclusions.

NRF Presenters Share Economic Figures For Retail Sales

I promised data, here’s some of my takeaways from the National Retail Federation convention in New York City:

2008 National Shopping Behavior Study by Cavallino.  The survey was designed and managed by The Gordman Group. Research was conducted by Weise Research Associates. Out of 815 people phoned in December:

  • 55% said they spent less this holiday than 2007  BUT 18% spent more
  • 6% spend most of their money in a department store vs. 2000 when that was 15%
  • 54% shopped closer to home

What I found particularly interesting as the author of You Can Compete: Double Sales Without Discounting is that when they asked about advertising, respondents did not care about discount coupons, loyalty rewards, delayed payment, layaway or contests used to get them in the door. In fact the presenter John Rittenhouse said by looking at the numbers, you had to ask why the question was even asked responses were so low.

Also interesting were attitudes about shopping in 2009:

  • 69% expect to spend less BUT 58% of customers 18-24 plan to spend the same or more – if this is your target market – you’re in!

Finally attitudes about their own financial situation:

  • 46% expect to have a better financial situation than 2008
  • 42% expect it to be about the same
  • 12% expect it to be worse

IBM presented a study of 30,000 that was reported as well:

  • 91% of respondents are making spending sacrifices
  • 68% are buying less
  • 63% are buying promoted items
  • 43% are trading down to lower quality
  • 12% had more descretionary income

All this sounds interesting until Martin Lindstrom, the author of Buyology: Truth and Lies About Why We Buy, got up and said that what people say and what people do are most times very different.  That the rational brain only engages 15% of the brain.  He said that 15% is not what needs to be engaged – that’s just price and promotion.  

To succeed, you need to tap into the unconscious which is the driving force.   He quoted his study on smoking that showed conclusively the warnings on cigarette packages actually encourage smoking, areas of the brain light up when they see it.  That is contrary to what conventional wisdom says should happen.

One of his case studies was simply playing French music in a wine store. No additional POP, no additional salesmanship, just played French music. Sales went up 77% for French wines.  When he asked people, “Why did you buy French wine today?” all they could say is, “I don’t know, just seemed like a good wine.” A branded smell can do the same thing.

All that to say is there is a lot of data out there you can find “interesting,” but at the end of the day nothing has changed in 2009 vs 2000, we are still trying to understand what our customers do, rather than what they say.  And we can only truly measure that by what they buy.

Retail Sales Tumbled in December – End of the World!

The Wall Street Journal today has an article so full of hysteria, no wonder the market is contracting. Excluding autos and gas, sales dipped a bit over 1%. From the first few paragraphs, you’d think it was off by 20%. Imagine if your kid came home with a report card of 98.7% – would the sky be falling then?

Shri Sundaram was right when they commented on the article, “WSJ Crew: Give the readers something new. We all know we are in a recession. We all know that consumer spending has slowed considerably. And, we all know retail sales sucked this past holiday season. Why on earth are you hammering that point over and over!!!??? Give something new. Tell the readers how the economy is shaping up over the next 12-24 months. What’s the look of the boom that will follow the doom-n-gloom… Get over it.”

Indeed – get over the hysteria.

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