martinhoffmitz.com

Fascinating commentary from Economics News Site – Mish Shedlock

Deflation Pressures Intact

This may be one reason why government bonds refuse to sell off despite the surge in the equity market. The Wall Street Journal reports that companies like Clorox is keeping prices stable on items like its new and improved trash bags. Campbell’s Soup is cutting prices on select beverages (like V8). Burger King is selling double cheeseburgers for a buck. And, what’s this about RIM starting up a smartphone price war? According to a new holiday season poll taken by Deloitte, 74% of respondents intend to only buy items on sale or with discount coupons. The same survey indicates that holiday shopping will be flat year-over-year this year, which at one point would have been amazingly bullish but at this stage is likely a setback for the stock market. Keep in mind that Wal-Mart is now expecting 1.0%-2.0% sales growth into January 2010 whereas a year ago that expectation was in a 5.0%-7.0% range.

If there is some good news for retailers, it is that they are heading into the shopping season with fairly lean inventories — that won’t prevent but should help limit ultra-steep markdowns this year.

Martin Comments:

United States retail will very tight excepting niche markets, we are finding that understanding the patterns and behavior behind the analytic sales numbers is critical to success.

Retailers have a better grasp than ever of the retail scene through a variety of analytic tools, what they do not know, is:

WHY DO CUSTOMERS DO WHAT THEY DO AND HOW DO I MOST EFFECTIVELY INFLUENCE THAT BEHAVIOR IN MY FAVOR?

This is working very well for our retail partners,

Employ strategies and tactics that effectively alter the shopping behavior of your customers – the primary shopper, and those who shop with them and their circle of influence.

You will see what increases revenue in the store today.

Patterns caused by underlying behavior, make your sales numbers what they are, you really need help understanding the underlying thinking of your customers and market.

I think of you, when I walk through your retail stores and the malls you have built…

You and I both know, what customers say, and think, and actually do, when it comes time to spend, can be quite different, this research below may be helpful to you.

The question that I would pose:

“How do you get a granular fix on your changing customer and market, and how do you use that knowledge to take fast effective actions where it will count the most?”

I sincerely hope this is helpful to you, ps what will your customers and potential market be doing this year? My experience suggests that we can help.

Martin

(from retail wire)
Turbulent Times, Reexamined
Actual Behavior vs. Expectations

About the research:
The objective of the 2008 Unilever Trip Management Report was to uncover unique insights into the shopping tactics that would emerge under the stresses of the recessionary economy. Research, conducted in March of 2008, covered 47,000 U.S. households and 36 key categories.

Later in the year, Unilever used cluster analysis to understand the patterns of change in actual buying behavior that had occurred across 120+ Nielsen categories.
When Unilever reported the results of its Trip Management Report last April, the threat of recession had consumers worried but, for most, the reality hadn’t yet hit. Unilever felt that the rich insights derived from that study warranted a deep dive into the data later in the year to see how CPG categories were actually shopped in 2008.

Highlighted “key takeaways” from April’s original Trip Management Report prior to sharing results and recommendations from the follow-up research. Of course, even in March of ‘08, consumers expected that economic circumstances and rising prices would change the way they would live and shop. Shoppers recognized that “quick trips” were uneconomical and hoped to do more planned, stock-up shopping to save money. Also, retailers were advised, given the results, that top and bottom tier positions would do best, while consumer propositions that appealed to the mid-tier would have to struggle more in order to maintain market share. And since both high and low income shoppers were in many cases “swapping habits,” it would be essential that operators looked at the effect of changes category-by-category.

That was then, this is now…
In order to get a handle on what shoppers were actually doing in 2008, vs. what they assumed they’d do, Unilever turned to cluster analysis – simultaneously considering the shoppers’ savings tactics across 120+ Nielsen categories. What was revealed were seven distinct patterns of CPG shopping in 2008. For retailers and manufacturers, a look at these macro-trends can help determine which categories shoppers are abandoning, cutting back on, and which are continuing to prosper.

The new research revealed that there is certainly “trading down” going on, but it is the penetration declines that are most troubling to CPG categories. Retailers should

• Find SIMPLE ways to increase their value to shoppers and make sure that these are communicated clearly and often;
• Come to understand the types of sacrifices their shoppers are making and find ways to help them cope and feel better. Shoppers need to feel that you understand their pain and want to work with them in these difficult times;
• Understand how shoppers are treating important categories to help determine retail strategies;
• Leverage “Categories That Grow in Turbulent Times”;
• Drive buying rates in other categories.

Time to get a real handle on the real thoughts that link to purchase actions of your market