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The radical new shopper is getting ready for a very different Christmas. First, here is an excerpt from the International Council of Shopping Centers:

This year, retailers are expected to see a 1% increase in same-store sales in November and December, according to trade group International Council of Shopping Centers. Factoring in January, sales may rise 1.5%, their best performance in three years, ICSC said.

Last year, they dropped 5.8% in November and December and declined 5.4% including January, marking their worst performance on record by both measures, ICSC said.

After trending downward for the past two years, U.S. average weekly earnings have risen, which may translate to “a positive omen” this holiday season, ICSC said.

At the same time, some signs of improvement in the job picture are emerging, with initial jobless claims declining to below 550,000 in September. In March, they reached their highest level in more than 26 years. The recession, which began in the 2007 holiday season, ended this past July, ICSC’s chief economist Michael Niemira said in an email.

“Retailers will experience their first non-recession holiday season in three years, and economic growth is fundamentally on the mend, even though there will be lingering pockets of weakness,” Niemira said. “The wear and tear of the recession and financial crisis on the consumer psyche [are] slowly giving way to renewed hope, optimism and most likely gift buying.”

In the wake of this year’s nascent economic recovery, shares of department stores and upscale retailers like Macy’s Inc. , Saks Inc. , Nordstrom Inc. and J.C. Penney Co. have outperformed the broader retail index and discounters such as Wal-Mart Stores Inc. .

As a case in point, at the recent Coterie trade show, which showcased designers’ spring collections to retail buyers, there was a steady flow of traffic, with retail buyers and designers seeing improved sentiment and orders. See full story.

The recession and record-high unemployment have led retailers across the board to lower inventory, which likely means they won’t have to offer the steep profit-eroding discounts of last holiday season in response to a sharp fall-off in demand, Niemira said.

The recession has forced some retailers out of business, but those that remain will be stronger as a whole during the upcoming holiday season, he said. Retailers from Circuit City to Linens ‘n Things have shut their stores.

While the trend of consumers buying items for themselves may be “at risk,” spending on gifts will likely improve this year, he said.

“One of the only positive factors that the retail industry can uniformly agree upon is that the year-over-year arithmetic is more favorable compared with the dismal 2008 holiday season,” Niemira said.

Ok, nice spin, but with only the government and interested “spin” partners like the mainstream media, screaming into an empty room, I have news that you know in your gut is true

– THE RECESSION IS NOT OVER-

We are noticing that shoppers are way more careful, and they are far more likely to “shop around” than ever before, before they make a deal.

If you want to survive this season, you better make sure that you understand your competition very well.

Do you really know why your shoppers, and in store browsers go to selected competition?

Do you know what they are thinking and most of all

DO YOU KNOW WHAT IT IS THAT TRIGGERS THEIR BUYING DECISION?

Does your completion know better than you?

We notice that along with buying patterns, buying “triggers” are changing fast.

Price, perception of value, store display and the quality of display “communication and connection” are now critical.

Staff interactions are changing, and selling styles that create a “buy decision” are radically different now.

Buying is triggered by the right combination of store, environment, engagement, experience and value perception….

These factors are changing at a faster rate than ever before, and you need to be able to read the signs as they change, not weeks later in your sales data.

Get ready for a very brutal and competitive season, perhaps if you are ready, and proactive:

Season’s Greetings, and if you are not…Season’s beatings indeed…

Here is a useful article and my comments after the article:

Simon Houpt

Toronto — With files from Reuters Last updated on Wednesday, Aug. 19, 2009 07:49AM EDT

For a moment, you could almost hear the sighs of relief. When a trio of big U.S.-based retailers reported second-quarter earnings on Tuesday that beat analysts’ expectations, the markets responded with a little spring in their step.

Were consumers finally stripping off their recession-era duds to come to the rescue of the world economy?

Alas, a closer look at the numbers reported by Home Depot Inc., (HD-N26.76-0.17-0.63%) Target Corp., (TGT-N45.090.771.74%) and Saks Inc. (SKS-N5.64-0.08-1.40%) suggests none of the conventional approaches for targeting consumers are having an effect. The news from all three retailing powerhouses was only good because it wasn’t as bad as everyone expected, and consumers are still window-shopping instead of heading to the cash.

Home Depot’s second-quarter profit was down 7.2 per cent to $1.12-billion (U.S.) from $1.2-billion, while the high-end retailer Saks had to choke down a loss of $54.5-million. Meanwhile, Target, which has ridden a whimsical image of smart and fashionable fun to its position as the No. 2 U.S. discount chain, reported profit of $1.064-billion in the quarter, down 3.1 per cent from a year earlier. That followed last week’s news that even Wal-Mart Stores Inc. had suffered a 1.4-per-cent drop in revenue.

The U.S. consumer who is supposed to drive the economic recovery has yet to relax behind the wheel and stop shaking with anxiety. Penny-pinching has cut across a broad swath of the retail landscape, as shoppers steer clear of luxe goods at the likes of Saks, but also cut down on the more downmarket but still chic offerings of Target, and even the household staples at Wal-Mart.

Instead, consumers are looking to the lower rung of the retail ladder: the discounters. TJX Cos. Inc., which owns T.J. Maxx and Marshalls, reported a 4-per-cent rise in sales, and attributed it to “extraordinary increases” in customer traffic.

To try to lure back the most cost-conscious shoppers from the discounters’ aisles, retailers such as Target have responded by retooling their advertising campaigns to focus more heavily on price. In television ads this season, the red-and-white bull’s-eye marketer has heavily sprinkled its message with prices for inexpensive goods like summer clothing for the whole family.

“They’re trying to reposition themselves with a bit more of a price story, where previously they really avoided that aspect,” said Scott Smith, a senior vice-president with the brand consulting company Interbrand. “Target has definitely struggled in this economy.”

Once at the mall, shoppers are reminded by in-store displays that Target regularly checks its competitors’ prices.

But even the new marketing focus on price may not be enough.

Consumers, while more confident in their own financial security than they were during the dark days of last winter, still have legitimate reasons to be nervous: Unemployment is projected to remain high for the next year, consumers perceive that their paycheques are not keeping pace with inflation, and many workers remain concerned they’ll be laid off, said Ken Goldstein, a labour economist with the New York-based Conference Board.

The recession, now more than halfway through its second year in the United States, is still holding on tight. “To be blunt about it, [consumers] are wondering how goddamned long this is going to go on,” he said.

With U.S. students returning to the classroom in less than three weeks, early back-to-school sales seem to be a widespread bust. Worse, those sales are a key signal for U.S. marketers and retailers on how to approach the holiday season. If sales remain sluggish this month, the rest of the year will be a washout, too.

Mr. Goldstein noted the increase in the savings rates for U.S. consumers was preventing a speedier recovery. “In some past recessions, consumers were not spending money consumers didn’t have. This time around is different. Consumers are not spending money consumers do have,” he said.

While the increase in the savings rate is a necessary step for the long-term health of the economy, few seem as concerned about the state of affairs 10 years down the road as they do the state of affairs next year. The U.S. consumer, then, isn’t so much a superhero as a cardiac patient that needs a jolt of life now.

“The money is there if consumers decide to spend, but there’s no evidence they’re in any mood right now, or are likely to be through the holiday season, to start to spend some of that money.”

Martin Comments:

One, the money is not there, average savings rates are climbing because consumer debt is being squeezed off, and or paid down or defaulted on.

If a customer has less credit available, does that sound like more money available to you?

So, it will be a brutal fight for market share and every dollar this year.  In addition, your budgets are decreased, and your head count is down.  You will need a very accurate method to climb inside the mind of your customers and marketplace to gain KNOWLEDGE, INSIGHT, AND INFLUENCE.  You will need to assess very accurately, what you can do with minimal resources, that will have MAXIMUM IMPACT ON SALES AND REVENUE.

Are you ready to fight intelligently?  You will have less money less time and less resources, you better be smart and have real time intelligent influence.

Your competitors will.

Here is an interview from the Globe and Mail, I will make comments after the excerpt:

It’s no secret that consumers aren’t spending as much as they used to, and they’re buying different products as well.

Overspent baby boomers in particular used to be the most brand-loyal of all shoppers. Now, they’re perusing the weekly sales flyers like any other bargain hunters and causing grief for small businesses across the country.

“Brand loyalty is waning and comparison shopping is increasing,” says Gordon Hendren, a Toronto-based consultant who spends his working hours closely analyzing consumer behaviour.

“One of the trends that we see is a kind of cocooning, simplifying life and spending less,” says Mr. Hendren, who is president of Charlton Strategic Research, which, along with the Strategic Counsel, has just completed a quarterly survey of shifting consumer attitudes in both Canada and the United States.

Will a “new” consumer emerge through this recession? That’s one of the questions Mr. Hendren and his team are studying. They are also looking at how consumer behaviour is evolving, how the environment is playing a role and how brands can engage with buyers.

Mr. Hendren has more than 20 years of experience conducting consumer studies and providing insight, with client experience ranging across such sectors as media, petroleum, financial services and retail. He is also an expert in brand tracking and brand marketing. He is a graduate of the commerce program at Queen’s University in Kingston, Ont.

Mr. Hendren joined us earlier to talk about consumer behaviour and its effects on business.

First of all, as an expert in consumer behaviour, what kind of general advice are you giving to CEOs today?

Gordon Hendren: Although we see the recovery taking some time (likely a few years), good brands, smart brands, brands with a good point of difference and a value proposition should protect and even gain share.

Today is a time of risk but also a time of great opportunity for their brand and business – this is driven by brand loyalty declining and comparison shopping increasing dramatically, as consumers search for value. The paradox of the current marketplace is that many companies have dramatically cut marketing spending at exactly the time when they should be increasing marketing spending – to defend their position and take advantage of this opportunity. While there is a short term gain from cuts there may very well be a long term consequence. The weaker brands will likely suffer and decline.

Competition is increasing, so focus on your brand’s/company’s point of difference and competitive advantage. If you don’t know exactly what your point of difference is – I strongly suggest identifying it, quickly!

Dave Michaels, globeandmail.com: I’ve heard that this recession came on so quickly and frightened so many people that it has forever “changed” consumers. We’ve seen lots of stories about people cutting back who never thought they would do so, and now they are saying they’re not going to go back to their old ways. Do you think that’s true?

Gordon Hendren: There is no question that attitudes have changed significantly. That said, “forever” is likely an overstatement. Our quarterly tracking study, Consumer Shift, shows a significant pullback in consumer attitudes toward spending continuing and that a quest for value is still very much the current mindset. Also, I do believe in “wealth effect” – meaning that if your investment portfolio is down and/or the value of your house/condo is also down you are less likely to want to spend more. Negative media can also play a role – especially when coming from the U.S., where things are worse than in Canada.

We have noticed some key differences within certain demographics: Ontario has been the hardest hit in terms of attitudes toward spending; women are most likely to say that they are “comparison shoppers”; those 35 and older are most likely to be “price is the bottom line” or “comparison shoppers” segments; those with household income under $50k are most likely to be in the “price is the bottom line” category.

The segment that is likely to have a longer spending pullback (and increased savings) is the pre-retirement (50-plus) group. A significant proportion of this age group is worried that, as of today, they do not have enough saved for retirement. While this may be good for the financial services sector (increased savings and investment) it is not good news for other consumer categories. While they will be very selective concerning value, this 50-plus segment offers an emerging opportunity to win new consumer loyalty driven by relevant value propositions.

It is essential to understand the mindset and needs of the new consumer. Yes, different products may be offered OR the consumer might buy existing products for different reasons today. As well it is also important to understand that the marketplace is segmenting, meaning that there are different segments that are very price-sensitive, some are value shoppers, some are brand-loyal.

Using the automotive category as an example: Hyundai recognized a fear among buyers of being locked into a new vehicle purchase (fear of losing their jobs), so they created the assurance program where if you lose your job within a year they will refund your money – obviously an added feature to a current offer that was very relevant.

The continued emergence of the online world is another trend we see, because it is cheap to use and is perceived to offer lots of stuff that is free, thus appealing to value-conscious consumers. Notice that Microsoft is getting into the search business to compete with Google.

In the sports world we see indications of growth potential in fantasy pools, betting on sports and playing sport video games. These appeal to the consumer’s need and desire for escape (as do movies, which are up significantly).

The bottom line to thinking about any new products – start with consumer’s needs and their mindset.

Certainly the financial/investment sector has lost a great deal of respect in the past year. Re-earning their clients’ trust needs to be a big focus for them.

While consumer demand in the automotive sector is down significantly several brands have stood out with a solid value proposition: Ford and Hyundai. Ford for its straight talk and employee pricing. Hyundai being the first to offer its assurance program. This shows that some brands with a solid product offering and relevant communication can rise up, even in categories that are experiencing a tough time.

Offering good value is fundamental and is more important than ever. Think beyond price. Our study shows that while consumers are spending less in general they are also looking for better value. Rewarding customers with value added, product bundling and loyalty programs is very helpful in such a competitive environment.

From a communication point of view, there is a need to be in tune with how consumers are feeling and thinking. A humorous approach can be very effective but is hard to do well; straight/honest talk is seen as a good approach by consumers.

Social media have created new channels for information (such as Facebook, Twitter). Also, social media have changed the speed/rate that information can travel. A bad consumer experience can get circulated very quickly to hundreds, maybe even thousands of people. This can be further amplified by the fact that the source is “trusted” (for instance, a friend within the social media network). Marketers are trying to figure out how to harness social media – and it is not easily done!

Martin’s comments:

Now is the time to climb inside the “Mind of your Customer and your Market”

Retailers know the numbers, analytics can help you determine what your customers are doing, the blind spot is your customers who are not in your loyalty program (typically at least 70%) and your in store browsers and competitors customers.  How will you get good, real time information on their actions?

Now get better analytics to really segment your customers.

Once you have better numbers, you need to know two CRITICAL FACTORS

WHY DO THEY DO WHAT THEY DO?

WHAT CAN YOU DO ABOUT IT THAT WILL BE MOST EFFEFCTIVE/

You will need a way to get inside the mind of your customers and your marketplace.  Your solution needs to be like a real time nervous system, telling you what is happening day to day in your stores, and in your market.

That is where we are finding the greatest return on effort.

_________________________________

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
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Martin Hoffmitz to me, Howard

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