Shopping 2011 & 2012

The US holiday shopping season will be judged a success with about a four percent increase over 2010, well above most predictions. Online buying surged about 15%. Though still small, online is a formidable path to purchase year round. Whether online or in-store, the American shopper shows signs of revival.

Black Friday (Nov 25) lived up to its reputation as the biggest consumer buying day of the year but was followed by Dec 24 and Dec 26 as the #2 and #3 biggest days as shoppers looked for the best deals. And retailers and online sources delivered the bargains – often with free shipping. Some retailers’ margins likely suffered; this might have been Kmart’s last Christmas.

Beyond yearend buying, 2011 saw more smartphone-enabled shopping and more review-seeking by shoppers. According to Google, consumers DOUBLED the number of sources they use to 10.7 sources before making a purchase. Word-of-mouth has never been more important or widely and seamlessly delivered.

What will 2012 bring? As broadband reaches more households and shoppers, we’ll see better-informed shopping behavior as shoppers search for the best deal for them, often defined as some combination of price, availability and convenience. Attracting and converting shoppers into buyers will continue to challenge retailers, brand marketers and in-store merchandising professionals as we seek to meet the needs of the more knowledgeable and technologically-enabled shopper. It’ll keep us all on our toes!

The Evolution of Shopping

Remember when “making a phone call” meant using a landline to call another landline? Today, many people don’t even have a landline and finding a payphone is almost impossible.

Shopping is going through a similar and profound transformation, too. Though 91%+ of all consumer purchases are still done in a bricks-and-mortar store, increasingly people are using new devices (e.g., smartphones) to “shop” even when they eventually go to a store to actually “buy.” Some stores are using mobile technology in their stores to bring the Internet to the aisle. Don’t find your size on the rack? Let’s find it on a virtual rack elsewhere and have it shipped to your home before you leave the store.

Back in the 1990s, some predicted that stores would soon be obsolete as our gifts, clothing, even groceries would be magically selected and delivered to our homes, closets and pantries. Such predictions persist today. Instead, I believe that we’re seeing successful stores become more and more vital, technologically-enabled and capable of delivery great VALUE in multiple ways, including: lower distribution cost; entertaining, exciting, even alluring environments; exceptional customer service; convenience; instant gratification; and unique products.

Great stores provide great value. Part of that value proposition is the displays, fixtures, graphics and layout of the store, things at which display and fixture companies excel.

“WE MAKE THINGS HERE”

That’s a phrase people in northeastern Ohio will soon see and hear more often in advertisements and promotional materials. After decades of “Rust Belt” hell, manufacturing is enjoying a renaissance here. Many old-line industrial operations have fallen by the wayside while industries like aerospace, materials sciences and health sciences are growing. Industries that apply world-class technologies and techniques are flourishing here. That’s why the state’s regional economic development group, Team NEO, has chosen that phrase as their new tagline.

The phrase reflects new economic research showing that, between 2010 and 2015, manufacturing in the region’s 18 counties is expected to far outpace manufacturing growth in the rest of the country.

This phrase aptly describes Tusco Display, too. Unlike many display producers who may design and sell but outsource all of their manufacturing, Tusco Display has consistently reinvested in our manufacturing capabilities, even during the tough years of the recent past. That’s why we can say, “We make things here” today, too.

With modern production capabilities and skilled associates, northeast Ohio manufacturers are winning business and finding growing success. At Tusco Display, we’re proud to count ourselves among them.

Shoppers Gone Wild

Ten years ago, Black Friday was a phrase used in American retailing circles but not in the common vernacular. Today, who doesn't know about it? It's become a sport of Super Bowl proportions, involving over 226 million people, 6.6% more in 2011 than in 2010.

And they spent more. On average, Black Friday shoppers spent 9.1% more than they did a year ago, according the the National Retail Federation. In total, Black Friday spending topped $52.4 billion, up 16% over 2010.

Shoppers haven't let up either. IBM reports today that Cyber Monday sales grew by a whopping 33% over 2010, this on the heals of double-digit increases on both Thanksgiving Day and Black Friday, too. What's going on here? Have shoppers gotten into the liquor cabinet?

Some pundits fret that shoppers won't maintain this pace, that they're buying early and won't have staying power. Don't bet on it. The American consumer has become somewhat inured to the received wisdom that we're in a "bad economy," feels like she can spend more now than the holiday seasons of 2008, 2009 and 2010 and is determined splurge a bit. She's pared her debt load, cutting per-capita debt to 2005 levels, according the Bureau of Economic Analysis. "Hey, times aren't great but we're doing OK. I'm buying both blouses instead of just one."

This may bode well for improved general economic performance and the jobs picture in 2012. Since consumer spending makes up roughly 70% of our economy, when shoppers become buyers, our economy grows.

OCCUPY AISLE STREET

I haven’t slept well in weeks. Colder weather and unfriendly natives have dampened my spirits. Is it really worth it? Ever since I decided to camp out in the aisle of (name your least favorite store here), I’ve teetered between feelings of accomplishment and despair. We’ve been hassled by store security but, hey, this store is open 24-hours and I know my rights! Can we make these people listen? Don’t they know who we represent?

We are the 70%! Study after study confirm that, on average, shoppers make decisions on exactly what they will buy while in the aisle and at the shelf. We are the decisions made on what deodorant to buy, what brand and size ketchup bottle we purchase, what flavors of juice boxes we pack in our children’s lunchboxes, what style and package size of toilet paper we take home.

Marketers would rather we weren’t so loud. Why can’t we go home, let TV ads and radio spots and newspaper inserts and internet pop up ads work their magic? They’d rather we were invisible because we’re hard to track, difficult to define. Many of them just don’t know what to do with us.

But some people listen. Some people know where to put their marketing dollars. It’s right here. On-shelf, near-shelf, end of aisle, in the aisle. We are aisle violators and we won’t be denied.

PUMPING UP P-O-P

As I filled my gas tank this morning, it reminded me of how that point-of-purchase has evolved over the past 25 years. I remember the first time I ever paid at the pump: an AM/PM store in Pittsburgh in the late 1980’s. The common wisdom then was, “Retailers won’t adopt this convenience because they want the shopper in the store.” Ha!

Fast forward to today. Most gas stations are convenience stores and vice versa today. Virtually all of them offer pay-at-the-pump. I infrequently enter a convenience store when I get gas, instead conducting my business at the pump. Quick and easy, I scan my loyalty and credit cards, clean the windshield, replace the gas cap and go. Beyond the price of gas, of course, the attributes I appreciate are: pump clean and in working order, including the receipt printer. Trigger holder so I can clean my windshield while gas dispenses. Newer squeegee with actual windshield wiper fluid (not just water) in the well. Trashcan that’s not overflowing. Sufficient space between pumps so cars can easily park side-by-side. Canopy to keep me out of the weather.

And when I find the attributes I like, I tend to return again and again. And I’ll go to that convenience store when I don’t need gas. The gas pump P-O-P makes a difference.

How about you? How do you choose what gas station you patronize?

AMERICAN RETAIL

One of America’s hallmarks as a society is the vibrant, constantly-evolving retail landscape. Consumer retail spending rings up about two-thirds of our gross domestic product (GDP). Five of the world’s largest retailers (by revenue) are US-based companies (#1 Walmart, #6 Kroger, #7 Home Depot, #8 Costco and #10 Target).

According to the 2007 Economic Census, there were 1,122,703 retail establishments with a total of 14.2 billion square feet of retail space in the US. That’s one store for every 250 or so people and a whopping 46.6 square feet for every man, woman and child in America.

Have we become over-stored? Undoubtedly. Back in 1980, there were 8.5 square feet for every US citizen. Even today, the UK has only 23 square feet of retail space for each of its people; Canada 13 square feet; India two square feet; and Mexico only 1.5 square feet. No wonder we see closing malls, vacant store fronts and wobbly chains. This year alone, we’ve seen 600+ Borders, 400+ Blockbusters, 200+ GameStops, 160 f.y.e stores, 117 Foot Lockers and thousands of mom’n’pop restaurants, drycleaners and cupcake makers close.

In spite of all of this, new stores, restaurants and dress shops open every day in America. We’re a nation in search of new, different and better. And this search drives our economy, stokes our competitive fires and makes us what we are as a nation. In some ways, we are what we buy. At Tusco Display, we thrill to serve this demanding, brutal, creative marketplace.

ON THE MOVE

One hundred years ago, American society started to go mobile as automobiles entered mass production (200,000 units in 1911), roads got paved, and traffic lights were deployed. Fifty years later, the interstate highway system accelerated our mobility and changed the way we perceive and interact with the world.

Today, a new form of mobility dominates. Worldwide, there are 5.1 billion cellphones for 6.8 billion people. There are more cellphones than TVs – or toothbrushes. These and more stats can be found here.

This new mobility impacts at-retail marketing. Quick-response (QR) codes, augmented reality (AR), mobile coupons – redeemed at 10X the rate of traditional coupons – and mobile search increasingly drive in-store behavior. And when people search online while shopping, 70% of those searches result in action within one hour.

Just as cars changed our culture and our buying habits (e.g., Holiday Inn, McDonalds, suburban malls), so too smartphones are changing how we perceive and interact with the world. Understanding and responding to these changes in-store is driving a great deal of marketing creativity today. How are these things impacting product merchandising? Look for those impacts all around you.

Clicks v Bricks

Do "clicks" now get the same level of respect that "bricks" do among retailers who have both traditional and online retail assets? That's a question posed by Allison Enright in her Sept 21, 2011 column in InternetRetailer. Frankly, I think that she asks the wrong question.

Whether it's a catalog or a kiosk, a website or a store aisle, a phone app or a direct-response mailer, they are all THE point of purchase. When a retailer starts parsing sales between channels, their brand and their message can get lost.

Worry less about how shoppers access you. Instead focus more on being the same responsive, enabling purveyor of what shoppers want when and where they want it. That's point-of-purchase marketing. As shoppers click away in the aisle, the difference between clicks and bricks grows smaller and more irrelevant with each passing day.

Tasteless Tomatoes

Marketing guru Seth Godin posted something today that rang true with me (as his posts often do). Just as in the case where his local supermarket "stocks waxy, tasteless tomatoes from Chile and Mexico and Florida" when local produce is truly amazing this time of the year, too many marketers today deliver "good enough." They've abandoned delivering truly memorable, valuable and inspirational products and services. This isn't universally true, of course, as patrons of Nordstrom, Zappos, Ritz Carlton and even little guys like Bread Head Bakery can attest.

As a company that helps marketers present wares in hundreds, even thousands of stores, we can fall prey to the same malaise. It's tough to wow when you're using the same tools for the same products in a c-store, supermarket, drug store and mass merchant.

Finding the wow on a budget is the trick. When you do, though, marketing magic happens.

WHERE'S THIS ECONOMY HEADED?

In the wake of a shaky summer, the US consumer confidence index has reached its lowest point since 1980. Though mortgage rates are at a 60-year low, few houses are selling and many people are still coping with home values below their mortgage values. News reports today claim that the American family income has dropped for the third year in a row – to roughly 1996 levels (in inflation-adjusted terms).

Things are tough out there, right?

Yet, many area manufacturers continue to hire and invest in their businesses. Tusco Display recently opened a new facility in New Philadelphia. In a Tuscarawas County Chamber of Commerce survey of 43 of our larger manufacturing concerns, 26 of them plan facility or workforce expansions. And we’re on the cusp of a natural gas boom here that will bring many new businesses, people and dollars to our regional economy.

Why the disconnect? It’s two-fold. First, people are still hurting from the Great Recession of 2008-9 and feel insecure. They lack confidence to take risks, e.g., switch jobs, buy a home, start a business. They are playing things close to the vest. They’ve learned from past excesses.

Second, both federal and state governments are making many changes that make us uneasy. From ObamaCare and debt ceiling brinksmanship to SB5 and restructuring state agencies, change makes people uneasy. We like stability and predictability, things in short supply these days.

Times will improve and we will not see a repeat of 2008. Until people see it, feel it and believe it though, our lack of confidence will impair our ability to take advantage of the opportunities before us. At Tusco Display, we’re moving forward with confidence.

Energy

Consider what the your body does in an average 24-hour period: Your heart beats 100,689 times. Your blood travels 168 million miles. You take a breath 23,040 times, inhaling 438 cubic feet of air. You eat more than three pounds of food, drink about three quarts of liquids and lose almost a pound of waste. You speak 25,000 words. You move 750 muscles. Your nails grow .000046 of an inch, your hair .01714 inch. You exercise seven million brain cells.

And you wonder why you feel tired sometimes?

In-store marketing fixtures grow weary over time, too. Just as surely as your body’s working, so do those displays, those endcaps, those power wings and POS signs. They get thumped by carts, scraped by products, worn by cleaning, and faded by UV light but still they soldier on, communicating with any passerby.

When they start to look tired, it’s time for a refreshing. It might be a new sign, replacement of parts or the complete replacement of the unit. Displays and fixtures work hard. Keeping them looking their best requires investment but it’s money well-spent.

Magic Glass

"Any sufficiently advanced technology is indistinguishable from magic." ~Arthur C Clarke~

Do you remember when you first learned about the Internet? Or when you first used a spreadsheet program? Or marveled at color TV? I'm dating myself but I remember all of those things. They all seemed like magic to me.

What magic lies before us? How will retailing continue to morph? How will technology transfigure our lives? Here is one company's vision for what lies ahead in the not-too-distant future.

Mobile Mania

Have you noticed? Retailers everywhere are rolling out mobile apps for iPhone and Android platforms to make using their stores easier to shop, coupons easier to use, and advice easier to acquire.

They know that we'll only see more and better applications for smartphones with each passing week. Better to get on board, learn as you go and be seen as a store that's deploying the latest and best tools for shoppers. Here's an excellent article that shares relevant data on the trend from the August 4, 2011 Columbus (Ohio) Dispatch.

Retailers are driven to adapt by competition and shoppers. As either or both employ newer tools like smartphone apps, they will respond. And the shopping experience will continue to evolve and improve as online and in-store complement one another.

A Facebook friend posted the accompanying photo of a bug display - yep, real (though dead) bugs - that he saw in a grocery store. Though not pictured, in addition to the aforementioned bugs, the display also sells bug books.

You can use displays to sell just about anything. Even dead bugs.

Couponing

It's long been a big business but, according to the National Retail Federation BIGblog, coupons are once again "hot." Mobile apps, billion-dollar babies like Groupon and even the TV show "Extreme Couponing" have made it so.

Coupons primarily influence trial and forward-buying. They are a great tactical tool. And, according to the NRF, they do impact sales.

But not like the point-of-purchase where two-out-of-three purchase decisions are made. If you want to make a lasting impact on purchase decisions, invest where most purchase decisions are made: in-store.

In-store Cacophony

I recently visited Las Vegas on business. It struck me that the town mirrors the at-retail marketing universe.

The hotels and casinos epitomize the cacophonous nature of in-store marketing. We both make noise. Just as surely as ringing bells, clicking wheels, flashing lights and pulsing music wash over a visitor walking across a casino lobby, our industry vies for attention, bombarding a visitor to a store, seeking to draw a gaze, to interrupt a determined pace across a store floor.

There are clear winners and losers in our respective games, too. Get noticed, get purchased and you win in-store. Put your money in the right place at the right time and go home a bit richer from the casino. Put your money in the wrong slot, bet on the wrong horse and you lose in either venue.

The biggest difference between Vegas and in-store marketing? Smart in-store marketing is a sure bet while gaming is just, well, gambling.

Innovation

According to a recent Harvard Business Review, Procter & Gamble is developing a "new-growth factory" to combine the best features of Edison's labs and Ford's assembly lines to deliver fast, far-reaching breakthroughs. That's helped the company's innovations hit their profit-and-revenue targets 50% of the time, up from a 15% a decade ago, and executives say they expect innovation-driven revenue to double again in coming years. "We know from our history that while promotions may win quarters, innovation wins decades," says P&G chairman and CEO Bob McDonald.

The custom display world understands innovation: it's what we do every day. Finding effective ways to cost-effectively attract the attention of shoppers that leads to purchase requires new thinking, new materials, new techniques and new insights on every project. As marketing-at-retail professionals, we embody innovation - or we are out of business.

Extreme Couponer: Friend or Foe?

Today's Ad Age includes a special report about the rise of extreme couponing and posits that those who coupon the most - so-called Enthusiasts - are a marketer's "worst nightmare." REALLY? I don't think so.

According to the excellent statistical presentation in the report, 13% of couponers accounted for 70% of all 2010 coupon redemptions. These folks are tactical masters but far from a nightmare.

If anything, marketers are their OWN worst nightmare. Coupons can be effective tools for generating trial purchases. If the brand lives up to consumers' expectations, couponing can lead to brand switching and eventual loyalty just as surely as sampling does. Brands and retailers that continually rely on coupons to goose their numbers, however, are simply sacrificing margin for top line results as they teach shoppers to only buy "on deal."

Coupons can work when properly executed. Coupons can also work against the interests of the brand and the retailer when abused. Don't blame the crafty shopper; blame the lazy marketer.

Territorial

People exhibit territorial behavior when they take seats in public places, limiting themselves to small areas so they don't have to "renegotiate" seating arrangements with other people, researchers say. In one study by Marco Costa of the University of Bologna in Italy, university students showed strong attachments to specific areas of a lecture hall; on average, each student made use of just 2.4% to 2.7% of the seating area. (Source: Territorial Behavior in Public Settings)

Likewise, shoppers tend to prefer certain areas and pathways of stores they shop often. Think about it: the average grocery store has over 30,000 different items and covers over 40,000 square feet. Some malls cover over one million square feet. That could be overwhelming and anxiety-producing. Shoppers who are anxious are less likely to buy or return to buy again.

Still, stores want shoppers to consider products beyond what they usually buy and try to entice them to visit areas off their normal paths. So, it’s a balancing act between keeping the shopper comfortable and encouraging shoppers to move beyond their personal comfort zone.

Companies like Tusco Display understand these dynamics and help both brands and retailers strike a balance that meets the needs of product producer, retailer and shopper.

Econ 101

The economy continues to improve with some real bright spots worth celebrating. Retail spending and industrial production are two of them.

According to Dr Ken Mayland of ClearView Economics, US retail sales reached an all-time high - surpassing the peak set in Nov 2007 - in December 2010. Annual retail sales rose 7.9% last year. This follows 2009's increase of 5.5% and the drop-like-a-rock year of 2008 when sales fell 11.1%.

Non-store retailers did even better with a year-over-year gain of 15%. On-line sales continue to chip away at the market share - well over 90% - held by brick-and-mortar retailers. Stores continue to benefit from a distribution cost advantage but they cannot rest on their laurels. Retail sales through clicks will keep growing faster than sales through bricks. Retailers must make the shopping experience worth it to shoppers who can do it from their desktops and even mobile devices.

Consumers aren't the only ones driving improved economic conditions. Industrial production ended 2010 still 5.7% below its 2007 peak but enjoyed a very respectable 5.9% rebound in output. Add the fact that many US factories dramatically improved efficiency and thereby profits, setting the stage for record-shattering profits in 2011. This will lead to some serious headway made in reducing unemployment in 2012.

Factories won't earn those profits through price increases. Capacity utilization, according to the Wall Street Journal, climbed from 75.4% in Nov to 76.0% in December, still below the mean average of 80.6% for 1972-2009. Though raw material inflation is gathering steam - steel prices have risen 25% since Nov, cotton's up 91% over the last year, petroleum prices are jumping - relative over-supply will constrain prices even as demand rises.

What's all this mean? Buyers are buying, producers are producing and the economy is on track toward restored health and vitality. We can expect solid growth for 2011-12.