Restaurant-quality food, but not from a restaurant

Observation:   A story from Supermarket News this week illustrates just how far grocery stores have crossed the line and moved into restaurant territory with their ready-to-eat offerings.  Click here to see the story.

Implications:   Kowalski’s supermarket—featured in this story—is a great example of how to think beyond the competitors in your category… and considering other categories you can compete with. 

(On a personal note, it’s fun to see this company doing so well, as they used to be one of my favorite clients when I worked with a media company here in the Twin Cities prior to joining CSS.)

Mike Anderson, for the Elm Street Economics consumer trends blog. A service of The Center for Sales Strategy, Inc.

UPDATE: Convenience stores are in the restaurant business, too

Moments after posting the story immediately below, I found this piece from Convenience Stores News about the expanding footprint that the ready-to-eat section has in the typical c-store.  Click here to see the story.  (To understand why that's important read my earlier post on the topic, found immediately below.)

Mike Anderson, for the Elm Street Economics consumer trends blog. A service of The Center for Sales Strategy, Inc.

Fast food meets the family dining room

Observation:   This week, I had the pleasure of talking about Consumer DNA with a really sharp marketing team in Orlando.  One of the things we discussed was the impending churn that we can expect in the in- and out-of-home dining category.  During the recession, lots of folks down-graded from upscale to family casual restaurants, or from family casual to fast food, or from fast food to eating at home.  As the recovery picks up steam, the folks who lost market share will try regain it, and the folks who gained share will try to retain it.

When I got back into the office this morning, an FMI newsletter led me to this story from the Orlando Business Journal, explaining how Winn-Dixie is expanding their take-home meal solutions menu.  Click here to see the story.

Implications:   This is another way consumers will be comparing Apples to Oranges… meaning that restaurants don’t just compete with other companies in their category; they must worry about another category they compete with (grocers).

Who are the direct competitors you’re focused on?  (The people who sell pretty much the same thing you sell?)  And while you’re focused on that obvious competition, are there other categories taking a bite out of your sector?  How might you defend?  Or, how can you play offense… and grow beyond your core business to find new veins of revenue?

Mike Anderson, for the Elm Street Economics consumer trends blog. A service of The Center for Sales Strategy, Inc.

Emotion vs. Logic: Does your customer buy based on one, the other, or both?

Observation:   One marketing cliché suggests that consumers buy with emotion, and then rationalize that purchase with logic.  But today’s IPSOS newsletter includes an important perspective on that old aphorism.  Click here to see it.

Implications:   The opposite of emotion is not logic, and the opposite of logic is not emotion.  Just because people love your product or service doesn’t mean it is irrational. 

Also important… just because a consumer might be loyal to your product or service does not mean they love it.  It could be that they just don’t want to shop for an alternative because they are completely un-interested in the category or loathe the idea of shopping in the category.  They choose a product by default, sometimes, as a means to avoid the complexity of shopping at all.

Mike Anderson, for the Elm Street Economics consumer trends blog. A service of The Center for Sales Strategy, Inc.

It would appear that the line between restaurants and retail continues to blur

Observation:  A recent story from Marketing Daily suggests that as convenience stores expand their menu of grab-and-go offerings, consumers frequently skip the fast food restaurant in favor of the small stores.  Click here to see the story.

Implications:   I ‘ve said it before and I’ll say it again… it’s not enough to worry about competitors in your category; it is equally important to consider which categories you might compete with.

Mike Anderson, for the Elm Street Economics consumer trends blog. A service of The Center for Sales Strategy, Inc.

Good food they can have at home. When people go out, they want service.

A survey by Empathica is cited in a Marketing Daily story this morning, which suggests that consumers across the U.S. and Canada want great service, not just good food, when they decide on a restaurant. Click here to see the story.

Implications: During Consumer DNA workshops over the past several weeks, I’ve had more than one conversation with marketing executives about how sit-down, family-casual restaurants lost share during the great recession, and what kinds of tactics might bring those customers back, now that a recovery is underway. My position: Low price is what drew customers from sit-down restaurants to fast food, but low price is probably not what will gain them back.

What about candle-light dining and date night? What about the feeling of being “waited on” by someone who sincerely enjoys serving customers? What about the quality of the food (and health), not just an entrée at a sale price?

Talk to your customers to be sure—a little good research is better than a lot of speculation—but what customers want from their sit-down dining experience or upscale restaurant is probably not limited to a cheap price on a meal. A coupon might get them back in, but the way they enjoyed their evening will bring them back in again and again.

Mike Anderson

Back to school: Delayed, reduced spending? (There are exceptions to that rule.)

Back in early August, I remember seeing an article from Marketing Daily which indicated the back-to-school shopping season had been slow to get started (click here to read the story). It seemed that many consumers were waiting for the all-important “list” provided by many teachers, explaining what incoming students would need to the year. Even through the Labor Day weekend, though, the BTS shopping season was looking a little weak, according to a story that was in Saturday’s New York Times (click here for a link to the piece).

Implications: If you sell clothing or pencils, you probably felt like the back-to-school season was a bit soft this year, at least in comparison to expectations. Compared to 2009, this year was supposed to be better. But before heading to the mall for blue jeans and notebook paper, it seems that students and parents stopped first in their closets, to see what might still fit and function without buying more of the goods which traditionally sell well this time of year.

In contrast to this fiscal conservatism, though, remember that there was some very strong spending on personal electronics this year; items the student did not have last year, and the parent could justify this year. (I wrote about this back on August 5, in another posting at ElmStreetTrends.com; click here to see that piece.)

Many people may have cut back in some areas, but it seems that many others ratcheted-up their spending in other areas. Worth noting: This season’s spending was a matter of shifting priorities, not just reduced spending.

ALSO WORTH CONSIDERING: Maybe the back to school season is not over. Perhaps parents (and students) will be buying supplies along the way, throughout the school year. Could it be that, instead of a "stock-up" mentality, consumers are switching to a "just in time" or, "buy as needed to even-out the pain" purchasing plan?

Mike Anderson

Apples & Oranges: Tech gadgets in, other spending out

I’ve asserted—on more than a few occasions—that it’s not enough to compete with other contenders in your category; you must compete with people outside your sector, as consumers increasingly realize they need to choose from a world of purchasing priorities.

A great example of that came in yesterday’s Wall Street Journal, in a story that suggests electronics are taking money from many other alternative categories. Click here to read the story.

Implications: It’s not enough to position your company, store, product or service as the best among similar alternatives. As consumers pick-and-choose between a number of competing desires—and knowing they cannot afford them all—they’re deciding to do without X in order to afford Z.

How can you demonstrate your product (and category’s) value to the consumer’s life? How can you demonstrate the way you deliver on core benefits, like common sense, family values, durability, and the reason you should be “the one indulgence” that deserves to be granted?


When you can do that, you can be Z.


Mike Anderson

Home improvement or vacation home?

A recent story from Marketing Daily indicates companies like Lowe’s and The Home Depot are banking on consumers not only staying close-to-home for this year’s vacation… but staying in their home.

Implications: When we were raising a young family, I remember spending several vacation days on the quest of building a fence, adding-on a deck, or engaging in some other form of home improvement. Instead of getting away to a better place, it was an affordable alternative that made our place better.

The strategy of encouraging these stay-at-home working vacations might be pretty smart; young families are not the only folks being cautious with their money these days.

This is another example of consumers being encouraged to “Compare Apples to Oranges,” in which the airlines or travel agencies might compete with the home improvement store, not just other travel options. The furniture store might be competing with the home electronics store. And the high-end appliance store might be competing with the upscale restaurant.
Who do you compete with… other than your competitors?

Mike Anderson

Don't just watch the votes. Watch the voters.

I have waited a while before submitting this particular entry, for one reason: Remarks in either direction could have been seen as political. But I offer this posting as a matter of simple observation in the way elections are evolving. Note that both matters come to us from California.

First, in case you missed, Carly Fiorina won her primary in the race for the senate. And Meg Whitman won her primary in the race for governor. (For more information, see this primary coverage from the LA Times.) Worth noting, in my opinion not because these were both GOP races, or because they are both highly successful women from the technology field (Fiorina is the former CEO of Compaq/Hewlett Packard, and Whitman is the former leader at eBay). These candidates are important for what they both are not: Life-long politicians.

Secondly, with the passage of Proposition 14, voters in California have signaled a fundamental change in their state’s primary process. Instead of having two parties pick candidates that voters must then choose from, the top two vote-getters of any kind (party or no) will be placed on the ballot for fall elections. Political pundits don’t know whether this is a change for the better or a change for the worse: But everyone agrees this measure represents a fundamental change to politics. Read more on the matter in this story from The New York Times.

Implications: In advance of recent primaries, much commentary focused on the challenges facing incumbents at a time when the voting public is growing tired of the status quo.

Perhaps this frustration will not only impact longtime office-holders… but the system itself.
Think about consumers who have been frustrated buying in your category. Are they likely to change providers… or could they go so far as to change categories, completely?

Mike Anderson

Comparison shopping, coming soon (with greater clarity) to Health Care

The Internet has made it easy to comparison shop… for everything from books to cars to real estate. Well, that same kind of competitive consideration is arriving soon… at a health care facility near you. According a recent story in the New York Times, there are a couple of companies who are eager to make it easy to compare everything from colonoscopies to stents. Click here to read the story.

Implications: There is an old saying that I will paraphrase: “No army can defeat an idea whose time has come.” Once upon a time, the sheer complexity of a medical procedure made gaining a second opinion confusing and time-consuming. Today, confusion is given clarity by the information resource of the web, and that same web has accelerated the comparison shopping process.

Even if your product or service has been too complex to compare in the past… are you ready for an age when comparison is commonplace?

It is in your very near future.

Costs, quality, features, follow-up services, satisfied customers. Which of these (or other) attributes will consumers use to compare you by? With whom will you be compared?

Mike Anderson

Competing with nothing

This week, a story from Media Post Marketing Daily focused on the most recent price “roll-backs” from Wal-Mart. Click here to see the article.

Implications: Based on a variety of measures, the economic recovery is underway for many consumers. But Wal-Mart knows that a significant number of consumers are still reeling from the effects of the recession. So, what’s the cost-efficient alternative to shopping at Wal-Mart?

Not shopping at all.

Some retailers might see these latest price drops as the cold, calculating move of a big company, trying to hit competitors even harder on price. I see it as a company respectful of the fact that many of its customers are on the lower-end of the income scale… and capable of even further spending restraint.

Mike Anderson

Isn't it funny how we "need" things that didn't exist just a few years ago?

A recent story from Media Post Marketing Daily explains how “gadget” sales are up… helping personal electronics retailers (and manufacturers) accelerate their recovery.

Implications: We heard a lot of assertions about how consumers had given-up on want-related purchases, and that they were only spending on needs. You already know I disagree with that assertion; all kinds of consumers interpret “need” in different ways.

The Media Post story—and that smart phone in your pocket—seem to agree.

Do you sell a want or a need? In whose opinion?

Mike Anderson

Broad appeal for private-label goods... and the brand

This morning, friend and fellow trend-watcher JoAnne Naganawa from Seattle sent me a link to this Media Post Marketing Daily story… explaining how diverse the appeal of private-label goods has become. (The focus of the article is now both Gen Y and Affluent consumers are gravitating to the goods.)

Funny… but about the same time, I was reading the actual Nielsen briefing cited in that story. Click here to read the report, “Store Brands Flex Their Muscles,” courtesy of Nielsen.

Implications: For all of the press given to the shift toward store brands, one graphic from the Nielsen briefing was particularly telling: It is a small but devoted group of heavy users that drive most private-label sales. See this graphic for an illustration of what I’ll call “the heavy-user effect.”

Further, while store brands may have gained ground during the recession, name-brand products still dominate most categories, according to another graphic from the report. Click here to see it.

I leave this research reminded that there is room for both products on the shelf: Those which focus on quality, and those which focus on cost.

Mike Anderson

Decisions by committee

Think of it as a by-product of an economy that has us comparing Apples to Oranges


A while back, I offered a posting about one of the epiphanies to come out of the Great Recession: While many consumers can still afford to buy almost anything, they now realize they cannot have everything. (See “Comparing Apples to Oranges,” February 2, 2010).

So, in a household that might be forced to decide between a new stereo or a new television (because they can’t afford both), how will the consumers involved decide which one is more important? If you have to choose between the annual vacation or a major home improvement project, what kinds of criteria tip the decision in one direction or the other?

This is an important issue to think about if you sell anything that could be perceived as a big-ticket purchase: If economics force the household to choose between a new room full of furniture or a new family vehicle, how will that choice be made?

Implications: In the foreseeable future, I suspect that more purchase decisions will be made by committee. After all, it’s not just about buying the new car and having the commuter enjoy the benefits it might deliver. If paying for the new vehicle means putting-off the purchase of a new home theatre system, the whole family is more likely to be involved in the discussion. And it might even be fair to expect that favor will be given to those items which benefit the largest number of family members… or those items which might serve multiple purposes.

As families get re-acquainted with the concept of budgeting, you might see family members selling each other on an idea, negotiating, lobbying… or even “trading votes” over which items the household should purchase, or which items should be deferred.

Are you making it easy for someone who wants your product or service to sell the rest of their committee on the idea?

Mike Anderson

Comparing apples to oranges

Throughout the Great Recession, a lot of businesses were perplexed about how to make lemonade out of the lemons they had been given. Unable to influence the amount of money coming in (revenue), it only made sense that companies would focus on the amount of money going out (expenses). Many enterprises went into “survival mode,” where cost control was the name of the game... and every expense was on the table, from reducing inventory to cutting payroll. Ultimately, many consumers noticed—and accepted—that a reduction in selection and service would be a natural by-product of the Great Recession.

Now, as the recovery gains momentum, it seems like more companies are going on “offense” again… with advertising campaigns and marketing efforts designed to ensure that, “If consumers are going to start spending again, we better darn well get our share.” If the car business is starting to pick up, each dealer wants to make sure they get their share of car sales. If home improvement is beginning to improve, then each hardware store, lumber yard and contractor wants to make sure they are considered for that purchase. In other words, many companies have gone from thinking about lemons they’ve been dealt… to standing-out among the bunches of other contenders in their category.

I’m thinking about something else.

There are residual effects that are likely to last far beyond the recession that gave rise to them. I’m not just talking about the now-cliché concept that, “the new frugality could stick.” I’m referring to the specific issues that drive that frugality. For example, the credit market is still tight, and more consumers are avoiding debt even if they qualify for financing; that means more people will be living, literally, from paycheck to paycheck. Also, the job market has not fully recovered; a household that had two incomes in 2006 might be living on 1.4 incomes right now. (Or, a person that had one great full-time career might now be living on two or more part-time jobs… and that might include stepping a rung or two lower on their corporate ladder.)

Household incomes are still amazing, when compared to most of the rest of the world. But ultimately, these conditions (and others) have led many consumers to this epiphany:

“I can still afford to buy almost anything. It’s just that I can’t afford to have everything.”

Implication:

Get ready for consumers who will be comparing apples to oranges.

Right now, many consumers are moving ahead with one purchase, knowing that it means a number of other purchases might have to wait. So, should the family move ahead with the new appliances, or the major home improvement? Should they pull the trigger on a new car, or put that expense off for a while and instead replace the tired furniture in their living room? Would it be smart to plan a family vacation this summer… or is that money better spent sending one of the heads-of-household back to school, so as to gain skills that would be more attractive in the current job market?

In a nutshell, consumers used to think in terms of “one of each.” Now, they’re thinking “one or the other.” That means, if you’re a furniture store, you don’t just compete with other stores that sell furniture. If you’re an appliance store, you don’t just compete with other stores that sell appliances.

It means that, in addition to worrying about competitors in your category, you might find it necessary to think about other categories you compete with. The “consideration list” might not be limited to other providers of the product or service you sell. It might look more like a set of diverse and competing priorities.

In some industries, it will be like comparing apples to oranges.

Mike Anderson

Apples to oranges: An illustration

[Note: This is not just a story about car dealerships.]

Recently, I was invited to speak at an Elm Street Economics event in Columbus, Ohio, which would be attended exclusively by owners and managers from car dealerships. I wanted to conduct some basic market research before the event, so the sponsoring television station allowed me to write a number of questions to be used in a survey of their loyal viewer database.

I didn’t want to dig for the same information that might be available through J.D. Power, Edmunds, or a manufacturer’s CSI reports. Among other things, I wanted to see how consumers might be thinking about setting their purchase priorities. I won’t bore you with all the results here, but I will give you two examples of what we asked and what we heard in response. (Note: The question format was multiple-choice. The survey received more than 1,800 responses; roughly 71% of participants were female, and the age balance was heavily skewed toward 35-64.) In this non-scientific study, we asked:

In these economic times, some people might choose to defer or delay one purchase, in order to afford another. What major purchase(s) might you delay in order to move forward with a vehicle purchase? (Check all that apply.)

28.7% said they might delay a furniture purchase

15.0% said Appliance(s) might have to wait

32.8% said Home Improvements

43.9% said they might defer a Vacation

17.6% said a New Home purchase

19.4% said, “Other”

Of course, the converse could be true; other priorities might keep someone from making a vehicle purchase. So we also asked the question in reverse:

What major purchase(s) might force you to delay the vehicle purchase you’d like to make, due to overall budget considerations? (Check all that apply.)

12.2% said an new Furniture is a bigger priority

26.4% said Appliance(s) need to come first

42.4% said Home Improvement is ahead of the car

17.0% said a Vacation was more important

16.4% indicated a New Home will happen first

29.4% said, “Other”


Implications: Here’s what I’m thinking about, based on this input. 32.5% of these respondents might have to delay a home improvement if they move forward with a vehicle purchase. On the other hand, 42.4% might not buy a vehicle right now… because they have a home improvement expense coming up.

Would now be a good time for the car dealership to partner with a home improvement retailer, to build an offer that could help the consumer move forward with both? For example: Take a test drive this week and receive a (modest) gift card to The Home Depot. Or, buy a truck and we’ll fill it with 2x4s (a gift card redeemable at the local lumber outlet). Or, “Invest in a family car right now, and we’ll throw in everything… even the kitchen sink.” The offers could be commensurate; a discount on Formica countertop with a mid-size car, or a discount on granite countertops with the purchase of a luxury car.

(I singled-out home improvement because lots of folks will be living in their current home for a long time to come, as they wait for home values to catch-up with the size of their mortgage. You might find out-of-home dining, day-trip vacations or some other category to be a more logical partner, depending on the input of the target consumer.)

In case you don’t have it yet, here’s the point: Your entire product or service category sits among other purchase priorities the consumer might have… not just among other competitors.

How can you make sure yours is the most important priority, or partner with compatible companies/categories to make the decision easier for the consumer?

Mike Anderson