Three post-recession reflections

It’s easy to understand why most of us would be eager to move the conversation away from recession and toward recovery. Recovery is more fun to talk about. But several components of the recession are likely to impact their participants long-term. In addition to publishing full stories here on various issues, I’ve been collecting examples of these issues over the past couple of months. Here are a few examples, offered in capsule form:

Observation 1: If you lost the place you live, where do you live now? This October story in the NY Times took an extended look at people who had gone through home foreclosure.

Implications: How have family dynamics changed in your market, and in what ways might you respond? With winter’s most brutal months just ahead, what resources might be available for people in your community who are living out of vehicles? Can you help? Do you serve households that now hold multiple families in a single dwelling? What products or services do you sell that might be appreciated because of their small size—both physically and economically—for folks who are now apartment renters instead of home owners? From furniture to appliances to home electronics, there is room for sales to go up, as some people continue to scale down.

Observation 2: Income declines which are deferred, but imminent. This story from the Wall Street Journal offers a glimpse at earners that enjoyed sometimes generous severance packages after losing a job, but have since seen that cushion of cash run-out.

Implications: While very recent unemployment numbers have shown improvement, beware of those households which remain impacted by a difficult job market. There are people who have fallen from the ranks of the unemployment numbers simply because they’ve given-up on their job hunt; when taking those folks into account, true unemployment has reportedly been as high as 17.5% (see this 11/6/09 story from the NY Times). And as the WSJ story points out, some families are only now feeling the hurt from a household income that may have fallen months ago. This is one of the reasons that “the new frugality” could stick around for a while… and the recession could bounce a couple of times before taking a steadily upward trajectory. BTW: Unemployment is not an equal-opportunity experience. See this graphic from the NY Times to see how folks in your target demographic are faring.

Observation 3: Microwave cooking is way up, other forms of cooking at home are down. That’s according to this story from Media Post’s Marketing Daily.

Implications: Are you still hitting consumers with a message of convenience and time savings? I think this story indicates that just because consumers are cooking at home with greater frequency doesn’t necessarily mean they have more time on their hands. On the contrary, many folks are working harder but earning less. That bodes well for anyone offering heat-to-complete meal solutions… and it makes the recent surge in Quick Service Restaurant sales easy to understand.

As I've said before, the effects of the recession are likely to out-last the recession itself.

Mike Anderson

OMG! I H8U! (Getting caught having casual text.)

Okay, it might seem like I’m just having fun with this. (And I am.) But it seems to me this story from today’s New York Times is illustrative of the trend toward the pervasive use of technology. It’s a story about the trail of text messages that can show up in a courtroom… during a divorce or other legal proceeding.

Implications: Old black-and-white movies gave us that time-honored image of the private detective, working late nights, sleuthing through telephone records, hotel bills and credit card statements to prove “wrong doing.” This story demonstrates just how mainstream text messaging and instant messaging have become.

Speaking of texting—and related matters of risk, law and liability—read more about the issue of text messaging in the NY Times series, “Driven to Distraction.”

Mike Anderson

Is this "the New Normal?"

(Or are we simply getting away from ten or twelve years of “Abnormal?”)

Within the latest edition of a newsletter that I receive from McKinsey, there was an interesting conversation about “the New Normal.” The dialogue included “Chief Strategy Officers from Boeing, Estee Lauder, Visa, and Smith International.

I’ll skip the usual “Implications” commentary, as each guest essentially provides their own thoughts on current events, as well as some speculation on the future. See the video immediately below, click here to obtain an Adobe PDF transcript, or click here to see the complete newsletter contents. Enjoy.

Mike Anderson

Food trends for 2010

Mining for trends can be a cumbersome task. Among other things, it involves everyday observations about human behavior, and sifting through piles of consumer research, industry newsletters, media reports, websites and blogs. But it is my good fortune to also have a great network of friends who might see something from time to time, and drop me a note about it. One example is JoAnne Naganawa from Bellevue, Washington, whom I met through the Association for Consumer Trends.

Recently, JoAnne sent me a list of food trends for 2010, offered by Phil Lempert (“the Supermarket Guru”). Since we’re approaching that time of year when a variety of folks offer their predictions for the coming year, I thought this might be a good time to share the info. The reports are offered in the form of two videos, both available below, If you prefer, click here to see a written version of Phil’s top food trends for 2010.

Implications: Sometimes, it’s hard to distinguish between an industry trend and a consumer trend. (Like a fashion show; is the style driven by consumer demand… or what the designer hopes consumers will demand!?) But I’ve seen enough of Phil’s commentary to know he is informed on matters of grocery store operations and consumer packaged goods… so enjoy his take on “what’s to come.”

[Thanks to JoAnne Naganawa for sending me these trend topics.]

Mike Anderson

Video 1:


Video #2:

Social vs. Personal... and Connection vs. Clutter

Recently, I read a story from Media Post’s “Engage: Teens” newsletter that inspired some thought beyond what the story intended. The article was headlined, “Friends endure, acquaintances are forgotten,” and essentially warned companies about the hazards of sending frequent and irrelevant brand messages through the various social media platforms.

There’s a reason why my thinking went beyond the gist of the story. In November, the Washington Post ran a story announcing that Oxford University Press had named their 2009 “word of the year,” selected from the various new additions to be found in future additions of the dictionary.

And the winner is: Unfriend.

Social media has grown at a dizzying pace. Whether you’re a fan of Facebook, a tweeter on Twitter, a connection on LinkedIn, or among friends on MySpace… you’ve likely spent the past year or two gathering “friends.” The problem is, many of those connections think of your “friendship” as a license to spam you about every little thing, from the latte you just bought, the latest personality test they’d like you to take, the change they just made to their status or profile, or the newest goofy “hug” or “quote of the day” they feel compelled to send you. So many of us are doing what we do when someone abuses the relationship: We’re firing friends. Whether by out-right disconnecting online (I hope nobody does that to me), or by blocking messages from various senders from being displayed, we’re using our digital defenses to stop the overload of social media spam.

Implications: Social media is like mass media in this way: Being given access to an audience (acquaintance) does not guarantee you will generate a deeper or more meaningful relationship (friendship) with that audience. In fact, having access to an audience doesn’t even mean you will receive the attention of that audience. The message must be relevant, timely, and presented in the context of what’s important to the recipient(s) with whom you are communicating.

Digital marketing tools—from email blasts to websites to social media—can be powerful, cost-efficient weapons and should absolutely be considered. But proceed with caution, and get help from folks who are familiar with how to use those tools effectively. Not just in technical terms, but in the way a message should engage the consumer. (Don't drown the recipient with what matters to you; express your offer based on what's important to them.)

I haven’t looked it up in the new Oxford Dictionary yet, but I’m guessing “Unfriend” could be defined as lasting a long, long time.

Mike Anderson

Distance tolerance differs for automotive sales and service

I saw a brief but fascinating report in today’s Automotive Digest:

The majority of potential car buyers are willing to travel an average of 125 miles when shopping for a car.

But they’re only willing to travel 27 miles for warranty service, after the sale.

The story was distributed by PR Newswire, citing research from CarGurus.com… and it reveals just one conundrum in the vast set of challenges facing a scaled-back automotive industry.

Implications: Picture the “new car supermarket” that attracts people from a hundred miles away, based on volume-driven low prices. What kind of service-based offer (or loyalty program) could help them bring customers back for their service needs?

Picture the local, service-oriented car dealership, which seems to be always the bridesmaid (providing service to owners of the brand they carry), but never the bride (the place where the customer buys the car). In what ways might they leverage the higher-frequency relationship they have with service customers… in a way that yield more vehicle sales opportunities? (One might need vehicle service several times a year, but a new vehicle only every few years.)

Picture the manufacturer caught between these two different constituents. In a world where you’re dramatically reducing the number of dealerships where your product is sold, how can you maintain a service relationship who’s accustomed to dropping their vehicle off “just down the street” when it needs service? If the dealership is now (more than 27) miles away, how might you avoid losing that business to a local Pep Boys, Precision Tune, or independent car service company?

If you're the local independent service provider, how can you capitolize on the churn that will result from all of these dealership closures? (Lots of service customers might be up-for-grabs right now!)

While many dealerships have vanished completely, might they be replaced by “service-only” satellite locations that carry the name plates of major manufacturers? (Chevrolet, Toyota, or Ford service centers… which provide service after the sale or warranty repairs, but which do not sell cars?)

Sometimes, consumer trends can influence corporate decisions. In this case, perhaps the converse is true; corporate decisions (the closure of so many auto dealerships) will be a spark a change in the way people consume automotive products and services.

Mike Anderson

Not just what or why... consumers increasingly decide based on "where"

It has never been more important to be close to the consumer… and to be able to let them know how close you are.

A recent article from Media Post’s “Engage: Gen Y” points-out how digital tools like GPS systems, GPS-equipped smart phones, and even location-based Twitter exchanges are making it ever easier for the consumer to find more than just a good deal. They can find the closest good deal.

Implications: As the Gen Y story points out, proximity marketing is “where it’s at.” And it’s been that way since the first sandwich-board toting ad man stood in the village square… advertising for the shopkeeper just steps away.

Consumers—and not just the young ones—are increasingly drawn to tools that make life management easier. (A trend that will only increase if/when petroleum prices rise again.) Have you studied your core customers… to know which tools they’re likely to use? From click-to-map buttons on web sites, to geo-based targeting of coupons, it’s important to stay tuned to these emerging habits… so you can deliver your offer in a way that hits close-to-home, or where ever the consumer might be.

Mike Anderson

Gift cards losing ground

More evidence about the declining popularity of gift cards appeared in a Media Post issue this week (see “Gift cards are the new fruitcake,” 11-30-09). The Tower Group research, cited in the article, suggests that one of the reasons the cards are not as popular with shoppers this year… is that they’re not as popular with the ultimate recipients.

Implications: There could be several explanations behind the decline of gift cards, there are two issues that I think play a significant role.

#1: People want to give with a splash. In an economy like this, I can shop around and find someone a nice cashmere sweater that looks like it’s worth $150 or more… for $50. If I spend that same $50 on a gift card, it looks like it's worth about $50. Which gift is more impressive to receive (and therefore, more fun to give)? You got it. The sweater--or any other hot deal--makes a bigger splash for the buck.

#2: Consumers still have trust issues. I wrote about this back in April (see “Things are not always as they seem,” 4-28-09). What is a $50 gift card worth, if it can be redeemed only at Bombay Trading Company? Or Sharper Image? Or Linens n Things? According to the Media Post story, more than $100 million in consumer-held value was lost when cards went un-redeemed because of business closures in 2008. A few more laws have been passed with the intent of greater consumer protection, but many won't go into effect until August, 2010.

If you’re trying to sell gift cards—or any other version of a promise to deliver product or render service at a later time—the first think you have to sell is trust. Why should I believe you’ll be around? Tell me about your history, your strength, your dedicated staff, your expertise, your competence.

The second thing you have to sell… is splash. What special “extra” is the holder of your store card entitled to? What are the perks I get for buying-in?

Not so long ago, “money was no object” and consumers would seemingly buy things for no reason. Now, every product and every service needs a reason (or specific value proposition). Gift cards included.

Mike Anderson

The holiday selling season, re-defined

This morning, a story in the New York Times indicates that overall retail sales for November show positive movement compared to last year… an indication that the holiday season might turn out better than some had hoped. That is interesting, in light of the fact that shoppers—whether combined or individually—spent less money over the Black Friday weekend. More information on the matter will be available later today as major retailers report their sales for the month.

Implications: There’s been quite a bit of coverage about how both retailers and shoppers started this holiday season earlier than usual. With stores offering “Black Friday discounts” long before Thanksgiving, it seems consumers helped change the chronology of the holiday shopping season. All of a sudden, “the biggest shopping day of the year” is not the make-or-break proposition it was a few years ago. Retailers seem to have successfully flattened-out the peaks—and filled-in the valleys—for a more consistent sales landscape.

Mike Anderson

Hotel chain gives a plug for electric cars

Element Hotels, owned by the Starwood group of hotels and resorts, will provide parking spaces that are charging stations for electric cars according to a report in today’s Marketing Daily.

Implications: This move is as much symbolic as it is substantive, since there are only six properties in the Elements chain, with five more locations planned. (Hardly a broad enough impact to alter the course of global warming.) But I commend the move… because the company is putting actions, not just words, toward the idea of environmental responsibility.

More importantly, the move reminds us to stop and think about the consequence of fundamental change in the automotive industry. What will a gas station look like, when vehicles no longer use gas? Will there be plug-ins at the workplace so cars can re-charge after their morning commute? How will “the Grid” need to be modified? Who will pay for it? What price will petroleum have to hit… before paying for the shift to electricity becomes economically attractive? And, will there be a backlash against electric cars, if/when people realize just how much of our electricity is created through the burning of fossil fuels? (I’m just sayin.’)

Long term, few trends will be more fascinating to watch than “The Fuel Economy.”

Mike Anderson

"I didn't know my computer (or phone, or car) could do that!"

A story in today’s Marketing Daily covered the success that resulted in a partnership between Ford and Best Buy… whereby consumers were basically invited to a hands-on demo of the Ford Sync system. Because of the results they enjoyed during the pilot project in Dallas, Ford is expanding the program to select markets in California and Pennsylvania.

Implications: Once upon a time, when you bought something complicated—say, like a computer—it came with an owner’s manual. I confess to seldom reading one… but it was nice to have a point of reference if you ever ran into a question. Today, when you buy a computer, you generally get an over-zealous web support link which provides all of the answers… except the one you’re looking for.

It seems to me that we’re buying increasingly complex products, with a decreasing level of explanation about how those products work. In contrast, Ford has presented Sync with context and clarity.

Context. Sync is not an automotive product. It’s a technology product, which lets you make phone calls on your cell phone, play songs from your music library, get directions to where you’re going, and run diagnostics on your engine… all through the “dashboard” of your vehicle. Heretofore, they had shown-off the system at their car dealerships. But now, they’ve started showing it off at a technology store—Best Buy—which benefits tremendously from the traffic generated by Sync clinics… as well as the relative position of “authority” they gain by helping show-off leading-edge technology. But another very important thing is happening here.

Clarity. In a world absent of “owner’s manuals,” Ford has found another way to invite people—er, um, I mean, Consumers—to stop in, put their hands-on, and play-around with the system. Test-drive the technology, just as you would test-drive the car. Eliminate the fear factor, and help folks realize the value proposition. This is experiential marketing at work: Prior to the pilot owner clinics, a combined average of 28% of Ford owners said they knew the ins and outs of Sync’s features. After the clinics, nearly 69% of Ford owners reported that they would use these features. And when you think about it, in an age when consumers are trending away from “what I have,” and trending toward “what I have done,” Ford and Best Buy are offering an experience.

These days, it is not uncommon for someone to discover a new feature on the computer or mobile phone they’ve owned for years. Their first reaction is often delight: “Wow! I didn’t know it could do that!” But almost immediately, their face falls to a frown, and they say something like, “I wish I’d have known it had that capability sooner!”

In an economy where consumers are being more judicious about every dollar they spend, are you giving justice to all of the benefits your product or service provides? Or do you just hope customers will figure it out for themselves? Would a clinic be in order? Or simply… an owner’s manual?

The owner’s manual was never as sexy as a technical support website, but it was consistent: Almost any manual had a table of contents at the front, and an index in the back.

Mike Anderson

The obligatory story about Black Friday and Cyber Monday

Much ink has already been spilled on this pair of retail benchmarks, so I won’t drone on about it here. Suffice it to say that more people went shopping on the Friday after Thanksgiving that might have been expected—good news, of course—but the spending-per-person was a bit down (symptomatic of consumers who are still in a cautious mindset.) Down, too, was overall retail spending for this date, formerly known as the kick-off of holiday shopping. (I say that because many retailers were offering “Black Friday” prices long before Black Friday.)

The consolation prize for retailers—or at least, those with successful websites—is that online activity met or exceeded expectations on the following Monday (symptomatic of consumers that are more likely to do plenty of research before making a purchase decision).

For more details on either retail benchmark, click to see the stories offered by Media Post on both Black Friday and Cyber Monday.

Implications:

While the recession is widely reported to be over, the effects of the recession are not. No surprises there. Lots of consumers have suffered some kind of economic trauma—or know someone who has—whether that trauma came in the form of a job loss, a drop in the equity of their home, declining investment portfolio, or just from being inundated with a slew of negative headlines over the past year.

People will purchase more cautiously for a while. As we have written in this space before (on numerous occasions), they are likely to be more deliberate, methodical, and careful.

This second-consecutive “down to earth” holiday season, success will find retailers who understand what shoppers are trying to accomplish… and help them achieve it.

Mike Anderson