The recovery continues, officially (but it varies by geography, category, and company)

This morning, breaking news from the Washington Post cited a 3.2% expansion in the Gross Domestic Product of the United States, the third consecutive quarter of positive news on the topic. Depending on your journalistic preference, a similar story was posted by the New York Times.

You already know how I love to perpetuate any positive news I can get my hands on, but I am also a realist. So let me season our enthusiasm with a few cautionary thoughts (and maybe some words of encouragement).

Implications: In its most simplistic form, two consecutive quarters of growth in the GDP should represent an end to the recession and the beginning of a recovery. (More complex measures, though, include growth in employment, housing and various categories of consumer spending.)

Earlier this month, too, The Economist published an article suggesting that the recovery actually commenced in June, 2009. (I loved seeing that, because I had offered a similar speculation… but way back in June, 2009. See “Dateline 2010: The recession is over,” 6/20/09.)

But with many miles traveled this year to conduct Elm Street Economics workshops and other consumer trend programs, I know that the recovery will not be uniform in all parts of the country. Having worked in South Florida this past week, I know that Miami and Ft. Lauderdale still have a long way to go; much of their economy is driven by tourism, which was hit particularly hard by the great recession. Further, the real estate meltdown was particularly severe there.

I started April started with a trip to Houston, where the overall tone was much more optimistic. With a diverse economy supported by the energy sector (exploration, recovery, refining and shipping), several local business folks I spoke with there seemed to think that their Texas city was about a year late getting into the recession—and about a year early stepping out of it—compared to the rest of the country.

What’s important to focus on is this: In spite of their local economies, there are still companies doing VERY well in South Florida, and there are companies still having a VERY tough time in Houston.

While the Great Recession impacted virtually all of us, it remains unlikely that a “Great Recovery” will simultaneously impact all companies, all categories, or all regions at the same time or in the same manner. So rather than focusing on the recession or the recovery, it remains important to focus on your response to the needs of your customers, and the benefits they hope to enjoy through the purchase of your product or service.

Mike Anderson

Sorry... but more optimism

My apologies for running behind this week, but I'm working from the road. Catching-up on email tonight, I stumbled across this Monday story from the New York Times.

Can't help but share the optimism.

Mike Anderson

More reasons for optimism

A few moments ago, my email in-box chimed with the arrival of this story from the Washington Post, indicating that home sales are doing even better than anticipated, nudged along by the final weeks of government incentives and warmer weather in most parts of the country.

Orders for durable goods are up, according to this story from the New York Times.

This blend of positive signs has helped boost the stock market today, according to this story from Forbes. Furthermore, citing data from J.D. Power, this Yahoo finance story suggests that automotives sales remain strong as we move through April.

Implications: Home sales are important to more than just the realtor and mortgage broker; a good month in housing can lead to sales for home furnishings, home improvements and much more. Factory orders suggest more manufacturing jobs, as well as confidence among both consumers and companies.

I have a lot of respect for surveys and research. But all of this positive news—based on actual activity—is nice “physical evidence” to counter the poor consumer confidence index that ended last week, as explained in this story from Reuters.

Mike Anderson

Store brands enjoy the dividends of frugality

And they might not be just for groceries anymore.

Evidence suggests that use of private-label (or “store brand”) goods is one of the recession-induced behaviors that is likely to remain strong long into the recovery.

In a recent Media Post Marketing Daily article, a survey (of 800 supermarket shoppers) by GfK Research indicated that 62% of consumers intend to purchase more private-label products going forward. 43% of those polled said they had recently ditched a national brand in favor of a generic purchase… up from 35% a year ago.

Another story focused on the topic of store brands just last week, this time in the Research Brief
from Media Post. One conclusion drawn by the article is that the idea of "lesser performance" by store brands, compared to name brands, is beginning to fade.

Implications: What interests me about this issue is the idea that store brands are no longer limited to backaged goods. Recently, I’ve noticed greater creativity and diversity when it comes to the idea of “store brands.” For example, I love to go camping and kayaking. So over the past year or so, it’s been easy to notice the new “store brand” at Dick’s Sporting Goods: Field and Stream. Specifically, I’ve been tempted by a Field and Stream hybrid solo canoe… and I’ve studied it closely enough to know that it was actually manufactured by Old Towne, a reputable boat maker. (I already own a larger Old Towne.)

If you abide by the laws of supply and demand, you will likely be giving your private-label goods a higher profile than you did before the recession… at least for the foreseeable future. But I’m wondering what other “next creative steps” might be in the realm of store-brand merchandise.

For smaller retailers, would it make sense to form (or grow their) buying groups to create greater leverage with manufacturers, so that more and diverse private label goods can be offered, even among smaller stores?

For packaged goods companies, does it make sense to partner with certain retailers to focus on specific products that can be sold as if they were store-brands? (For example, “Bounty, now the official store-brand paper towel of ____ supermarkets. And that means greater value for you.”)

[My thanks to friend and fellow trend watcher JoAnne Naganawa in Seattle, for emailing the Media Post story to me!]

Mike Anderson

Online shopping: The path of least resistance?

Remember the anxiety people had during the early days of online shopping? Yes, there were pictures. But even still, retailers were convinced that shoppers would never give-up the chance to pick-up the product, hold it in their hands, sense the tangible worth of a product before buying it. The psychological entry fee of buying something online seemed far too high… especially when matters of comfort, fit and feel were involved.

I raise the issue because of a recent story I read in the Engage: Boomers newsletter from Media Post, which suggested that many boomer women find buying their clothes online—yes, their clothes—to be easier than buying those fashions in-store.

Implications: While this may not be what the story was trying to imply, here are a couple of the thoughts which I elected to infer…

• Before webmasters start celebrating about their retail prowess, it might be smart to accept that sometimes, online shopping is fueled not by a website that is intuitive, but by an in-store experience that is not.
• If part of your business is e-commerce, it might be a good idea to survey those customers, to see if they are using the site because it is awesome, or because their in-store experience was not.
• Many consumers continue to use their online tools to do research and make advance decisions… in other words, to abbreviate the face-time you get with them. Are you training your floor personnel to make the most of that shortened face-time they have with customers?
• Do you offer a browser-equipped computer somewhere in your store, so customers don’t have to leave to check a competitor’s offering? (If they're in your store, you have the advantage. Don’t make them leave your place of business to compare… because then you lost the advantage.)

Just a little brainstorming.

Mike Anderson

Are you running a sticky business?

Cleaning off my desk this morning, I came across a Campaign Spotlight from a couple weeks ago (it was in the April 5 New York Times). It focused on a product we’re all familiar with: Elmer’s Glue. It’s a great day to be Elmer’s, since so many folks are trying to repair instead of replace.

Anyway… the writer used this quote to describe one mindset created by the recent recession: “Use it up, wear it out, make it do or do without.”

Implications: Sometimes, the simple things matter most. It’s a good time to reflect on these kind of questions…

Do you have a service department? Is it getting its fair share of your marketing effort?
Is your product durable? Can that durability be proven, and is it being touted as an important attribute?

Beyond its “primary purpose,” does your product or service satisfy any secondary needs? (People are used to multi-tasking, and appreciate products that serve more than one function, too.)

Sometimes, the simple things are the easiest to overlook. If people are trying to re-use, re-fill, retain and re-purpose many of the products they own. Is that causing your company sales problems.. or service opportunities? Helping folks get more value from the products or services you offer is one way of making sure they come back.

Mike Anderson

Coupons remain strong... among companies as well as consumers

Thirty percent of consumers said they had used more coupons in 2009 than ever before, according to a report by NCH Marketing Services cited at the Supermarket Guru website.

The story also suggested that while internet coupons only represent about 1% of coupon distribution, they represent about 10% of coupon redemption. (In other words, if consumers go to the trouble of downloading and printing it, they’re more likely to use it.)

Implications: While the data cited in this story largely focuses on 2009 behaviors, coupon use could likely be one of those “frugal measures” that consumers will hold on to well into the recovery (and maybe beyond).

Mike Anderson

Priorities in conflict: Swift versus thrift

Quite some time ago, colleague Jim Hopes sent me a story that he had read in the RBR/TVBR newsletter. The story (from last March) suggested that consumers were switching away from time savings—and toward cost savings—in response to the effects of the Great Recession. The opinion was based on research by AlixPartners LLP.

As if to raise the counter-point, I came across this story from Media Post Marketing Daily, which suggested that price is not the only thing that matters to shoppers. Quoting Todd Hale, Nielsen's SVP/Consumer & Shopper Insights, the story asserted that, “…consumers are getting tired of all the work it takes to save money, so stores need to remember that shoppers value other things, too, whether it's convenience, variety and assortment, or a focus on health and wellness."

Implications: I didn’t pass the RBR story along immediately after receiving it, because I wasn’t convinced that “price is now the only thing” that matters to consumers. I don’t think all consumers choose price above all else. I think that when financial conditions require it, many consumers are attracted by price. And I believe that in the absence of any other unique selling proposition, price becomes the default influence over most purchase decisions.

I was conducting an Elm Street Economics workshop in Houston last week, which had about fifty business owners, managers, and marketers in the room. I asked the room to indicate, by show of hands, who among us was expected to do less in their jobs today than they were expected to do three or four years ago. Not one hand went up.

Now, that’s far from a scientific survey, but the point is that a lot of people are working harder—and over more hours per week—than they ever have before. None of those folks have decided that price is more important than convenience. Perhaps, for a time, many have been forced to give price extra consideration. But don’t expect convenience to lie down for long, in a world where people are so time-stressed.

More important than price… is value. People often use the two words as if they are interchangeable, and they are not. Price is what the consumer puts into a product. Value is what they take out of it.

[My thanks to Jim Hopes for sparking this important topic. Jim is the CEO at The Center for Sales Strategy, Inc.]

Mike Anderson

Mastercard Marketplace: Part commerce, part research

In the digital age, it has become easy for companies to track the behaviors and preferences of their customers. Every swipe of the debit or credit card leaves a record of the purchase, and every keystroke of online shopping leaves your digital fingerprint on the visit.

Learning to mine that information for actionable data is one of the motives behind a new retail “store” being launched by Mastercard, according to this recent story from the New York Times.

Implications: This story was worth the read, not just to gain a better understanding of the kind of data that might be available through your various retail partners, but also because it provokes thought about the degree of monitoring consumers might tolerate… or not.

If sharing my information will help a company serve me better, I’m generally open to it. But if that information is not held securely, or if it is abused by the very company I’ve shared it with, or if it results in my being disqualified from purchase opportunities I would feel entitled to… my opinion could change in a big hurry.

What kinds of consumer intelligence might be available to you through various business alliances? Have you asked those allies? Are they protecting your customers’ information and interests adequately? (You know who will suffer if the customer is angered.) How could you gain more insights from the customers you serve… with their consent, and in the hopes of serving them better?

Mike Anderson

Multi-generational households on the rise

In today’s Research Brief, a study by Pew Research Center was sourced for the estimate that nearly one in six Americans is living in multi-generational household. The study, based partly on analysis of Census data, suggests that 16.1% of Americans—about 49 million people—are living in a home that included more than one adult generation.

The rise in multi-generational housing is related to recent economic conditions (job losses, home foreclosures, and families seeking more economically efficient living arrangements). But the increase is also a reflection of immigration; many people moving to the U.S.—particularly from Latin America and Asia—are accustomed to living in multi-generational households, according to the story.

To see the Research Brief article, click here.

To read the summary of findings from Pew Research, click here.

To see a similar, previously published article from Engage: Boomers, click here.

Implications: If your company targets “families,” it’s important to accept that traditional families don’t look very traditional anymore. On recent market visits to study “Consumer DNA” in places like New York, Houston, and even Tulsa, I’ve been reminded of just how dramatically the family portrait has changed; the description “Married with Children” often describes about 25% of the adults in a given community, give-or-take a few percentage points.

In recent decades, the non-traditional household has been fueled by many things, including the tendency for couples to marry later in life (or live together and not get married at all), blended families, single-parent households where the child is 18 years or older, and more. In more recent times, modern economic realities are a driving force, as are traditional homeland values (in the case of immigrants). But whatever the cause, the families you reach today could very well be extended.

Is your offer?

Mike Anderson

The state of branding: "I'm aware, it's just that I don't care"

In this morning’s Media Post Marketing Daily, there was a story about “brands making a comeback,” penned by Sarah Mahoney. The article cites a study by Brand Keys with regard to how important brands are in the apparel business; significant because of the way consumers abandoned brands, for a time, focusing instead on things like cost.

Implications: When I finished this story, I was left with the idea that brands are still important, but they’re not the same brands that were important four or five years ago. Brands that are associated with things like status or prestige have lost ground to those brands that reflect common sense, durability, and value for the dollar (and by that, I don’t necessarily mean “cheap”).

More importantly, the story hints at the idea that brand awareness is simply not enough. Robert Passikoff, the founder and president of Brand Keys, is quoted as putting it this way: "Everyone is aware of brands like The Gap," he says. "It just isn't important to them."

Just because people are aware of you doesn’t mean they won’t ignore you. Your target consumers must associate your brand or identity with a value proposition they consider important or attractive.

Mike Anderson

UPDATE: More optimism in the restaurant business

In a story cleverly titled, “The tables turn,” today’s New York Times is reporting signs of recovery in the restaurant business. media.

Implications: The article suggests that people are both feeling more optimistic (daring celebrate that the economic outlook for their family has begun to stabilize), and acting on the positive mood that comes with nicer weather and the end of winter.

If you're in the entertainment business (night clubs, theme parks, movie theatres, casinos, et al), you're a big fan of this kind of mood swing.

As people remember what it's like to get out and have a little fun, are you taking steps to make sure they remember you?

Mike Anderson