martinhoffmitz.com

Well, Merry Christmas for Retailers, here is one of the best economic commentators on the internet, who has been almost dead on for the last 3 years, telling retail Presidents CEO’s and Executives what to expect this year.  Yes it is very scary.

Retailers, you are in for an ugly year, the victory will go to the aggressively prepared.  There will be many losers.

Don’t let that be you.

Bloomberg is reporting U.S. Initial Jobless Claims Rose to 542,000 Last Week.

First-time claims for U.S. unemployment insurance unexpectedly rose last week to the highest level since 1992, a sign the labor market is deteriorating as the economic slump deepens.

Initial jobless claims increased by 27,000 to a higher- than-forecast 542,000 in the week ended Nov. 15, from 515,000 the prior week, the Labor Department said today in Washington. The number of people staying on benefit rolls the prior week rose to 4.012 million, the most since December 1982.

Job losses in the U.S. have totaled 1.2 million this year as the economy entered a downturn exacerbated by the worst credit crisis in seven decades. More firings will weigh on the economy and consumer spending, putting pressure on President- elect Barack Obama and Congress to agree on legislation that will stimulate growth.

The four-week moving average of initial claims, a less volatile measure, increased to 506,500 last week from 490,750 a week earlier. So far this year, weekly claims have averaged 404,000, compared with an average of 321,000 for all of 2007, when the economy added a total of 1.1 million jobs.

Citigroup Inc., the fourth-largest U.S. bank, will eliminate 52,000 jobs over the next year, twice the target announced last month, as loan losses surge and the economy shrinks, the company said Nov. 17.

Carmakers are also shedding workers. Ford Motor Co. plans temporary shutdowns at nine North American plants this quarter, idling as many as 23,000 workers, as it slashes production after an 18 percent drop in U.S. sales this year, the company said Nov. 12.

Layoffs Not Yet Factored Into Unemployment Rate

Announced job cuts have been piling up so fast I do not understand how anyone could be surprised by the number of claims.

Those layoffs at Citigroup (C) and Ford (F) are not yet factored into the unemployment rate. Nor are job cuts at Goldman (GS), JP Morgan (JPM), GE (GE), and scores of other financial institutions. Nor are the huge jobs cuts at retailers that are coming early next year after what is going to be the worst Christmas shopping season ever.

The retailer layoffs have not been announced yet, but it is easy to predict they are coming. When the layoffs are announced and the jobless claims rise yet again, the safe prediction is that economists will once again be surprised by the announcements.

As layoffs and job losses mount, this will add to the downward pressure on retail.

You will need to know your Customers and your market in much greater depth.

You will need to GET AHEAD OF THE CHANGING PSYCHOLOGY

You will need to HAVE INFLUENCE IN THE BUYING DECISION

You will need to use your knowledge to CRAFT the best market offering and value mix

Your knowledge and relationships will allow you to win business and customers.

I have recently worked with a large national retailer who had the smallest drop in sales within their category, because they know the market, the customers and the changing mood.

Your greatest challenge, will be seizing the opportunity.

_________________________________

Martin Hoffmitz
VP, Client Partnering
BehaviorWorx Inc.
#202 – 222 Islington Avenue
Toronto, ON  M8V 3W7

Email: martin.hoffmitz@bwxi.com

Office: 416.251.0111 x250

Cell: 647.287.4491
Fax: 416.251.9489
Web: www.bwxi.com

Walmart sales continued to grow stronger in the last month, after a period of stagnation for Walmart.  So, why is Walmart winning at a time when most retailers are weakening?

Certainly, Walmart benefits from the economic pressures that most North American consumers are feeling.

Walmart has another secret weapon that every retailer needs to think long and hard about.

Walmart Knows something that you don’t

Walmart knows their customers, browsers, competitor customers and the potential marketplace far more intimately than you do.  It costs you every day.

Walmart has one of the most powerful and effective systems in retail for grabbing the opinions, thoughts, satisfaction levels and INTENT of the entire potential marketplace, customers and potential customers.

Walmart is ahead of the pack.  Walmart knows not only what to do today in order to increase sales, but where it needs to be in the near future, in order to increase sales and market share.

What if you knew what really goes on in your stores in real time?  If you had an intimate and ACTIONABLE way to know what enhances sales, repeat visits, basket size, frequency and intent to return and refer?

Most retailers spend a lot of time guessing, and it costs them so many sales. The information that most retailers do have is not fresh enough, so retailers end up “driving forward, while looking in the rear view mirror” .  Retailers end up taking less than effective action while having poor methodologies for understanding what to do, and then understanding how well the action is working and what the real underlying reasons are.

Let us take a look at the latest retail sales numbers:

Most retailers were down :  “AP reports, “Holiday outlook turns grimmer after stores report weakest sales since 1969″

That is VERY grim news, but, one bright spot.  “Walmart posted a 2.4 percent gain in same store sales over the same period”

Walmart is way ahead, because they have used a “market Nervous system” to understand that the central theme change is massive.  Consumers are moving from the mentality of “I want”  to a mentality of “I need”

I wrote about this a number of times over the last few months.  Retailers will have to go back to 1989 and the last recession to understand how critical it is to understand how this major psychological consumer shift will change the way your consumers shop and the way you had better merchandise and sell.

Keep in mind that Target, the darling of retail one year ago, is far behind Walmart, Target dropped 4.8 percent.  The race will go to the swift, the swift need a consumer, market nervous system that puts them ahead of the market like Walmart, as opposed to behind the market, like Target.

If you want to get ahead, stay tuned, I will talk more about the methods that get you ahead in the coming weeks.

By now, many retailers can see only hard times ahead.  It doesn’t take much to absorb the mentality of a loser. But time and time again, through hard times and recessions, the winners in the battle for customers always see opportunity.

Here’s a powerful example:

For many years, the convenience store industry had the famous “slushy”, a nice high-margin addition to their produce line-up. During the last number of years, Alimentation Couche-Tard, which owns Macs Milk and is one of the largest convenience store operators in North America, used a positive “market opportunity” mentality to vastly increase their margins and market penetration. Alimentation Couche-Tard realized that the “Slushy” consisted of ice, water and sugar selling for a high price.  The first lightbulb went on and Alimentation Couche-Tard invested heavily in developing and marketing their ability to sell and highlight “Slushy” sales at all stores. Alimentation Couche-Tard began researching and developing their understanding of the “Slushy” buyer and the “Slushy” market.  A number of new insights emerged:

• The “Slushy” is hugely profitable

• The “Slushy” buyer is typically younger and purchases additional snacks and retail food items

• Young “Slushy” buyers have very different tastes and interests

Now, Alimentation Couche-Tard began to realize an incredible retail opportunity lay before them.  By centralizing the “Slushy” station and marketing/promotion in key stores, and by highlighting the importance of developing “Slushy” concepts and marketing, Alimentation Couche-Tard began to create a massive new profit center that would drive sales and business to new levels of success that would also drive the growth of the Alimentation Couche-Tard business model over the next few years.  In addition to high profits, the new “Slushy” center became a magnet for the most profitable group of new customers that any convenience store could dream of.

Alimentation Couche-Tard, while understanding their new customers, realized that young “Slushy” buyers were interested in novel flavors with outrageous colors.  Two new values emerged.

• The brand cache of major soft drink names and

• Outrageous names for unusual flavors

As a result, Alimentation Couche-Tard stores were able to massively increase profitability, attract a highly profitable new demographic and take a low profit tired business model and turn it into a replicable money machine across all of their stores. With the new money machine operating in all stores, Alimentation Couche-Tard went from hard times to good times and with a money maker in their back pocket, they embarked on an aggressive expansion across North America, moving from 375 stores in 1972 to over 2300 stores in 2007, a massive increase in market share, size and profitability, making it the second largest retail convenience chain in North America.  Here is a powerful example of how a positive opportunity focussed mentality created massive business growth and profitablity in the tired convenience store industry.

I wonder how many retailers are ready for the changing face of retailing? What do we know about our customers, browsers, and our competitors’ customers?

Here is a powerful reminder that a real time link to the mind of your customer and market place is CRITICAL to your survival in the months to come.

In “Toops Scoops: Culture of the Recession,” FoodProcessing.com reveals a change in attitudes that could prove costly for those who assume the patterns of the past few decades are a guide to the future.

Consumers spending less on wellness, more on consumer electronics.

What has the recession wrought? Nearly half (44 percent) of U.S adults report their diets are becoming less healthy as food prices rise, 52 percent buy fewer organic products and 48 percent spend less on health and wellness overall, according to a new study from Faith Popcorn’s BrainReserve (http://www.faithpopcorn.com), New York cultural trend tracking firm.

Sonar surveyed 1,011 consumers online (50 percent men and 50 percent women over 21 years of age) between May 29 and June 6 for BrainReserve’s “Culture of the Recession” survey. BrainReserve then analyzed the results against 17 cultural trends that it regularly monitors, reports Marketing Daily.

As other recent surveys indicate, Americans are cutting back on everything from food and beverages to out-of-home eating/entertainment to day care. Two-thirds (66 percent) are cutting back on overall spending, while 84 percent are making changes such as reducing shopping trips. Fully 90 percent of women and 79 percent of men (84 percent overall) are “buying less stuff,” and 90 percent are considering opting for a simpler life. .

You should go to the link or to FoodProcessing.com to read the full article.

Christmas is coming, so many retailers will make or break the year in the next 6 months, it will be financially dangerous to get caught out as the winds of the consumer mood change.

I have been saying for months that the mood of the consumer is changing from a WANT mindset to a NEED mindset.

This will heavily influence traffic patterns, choices of retailers, brand selection, basket size and the expectations that most consumers have for the retailer they give their business to.

We help our clients stay close to customers and the market.

For our clients, the market and customers are speaking loud and clear.

Buying patterns are changing and that change will accelerate.

There are better ways to get ahead of your market. I am seeing Retailers who get it, making a difference in their markets.

Martin Hoffmitz