3 New Forces Will Change your Business in 2011-2012


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Three phenomena will bring major changes to your customer base in the once stable, established neighborhoods that have surrounded you for years.

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3 New Forces Will Change your Business in 2011-2012

  1. 1. 3 Major Forces Will Cause Radical Change In 2011-12 . . . How will they affect you, What steps should you take? The answers below may surprise you...T hree phenomena will bring major changes toyour customer base in the once stable, established your business can count on. These new customers who have moved into your local market segmentneighborhoods that have surrounded you for years. most likely have a NEW, DIFFERENT profile than the ones that moved away. This means different wants, needs, concerns, and spending behaviors.u A new wave of short sales and fore- This is what the reveals – and why you have aclosures combined with “I’d rather rent huge advantage over your competition.anyway” mentality are continuing to cause NOTE: The key to the 3L Score that makes it un-housing prices to drop. like any other analytical tool out there is that it is site-specific to your business’ primary trade area. Be VERY cautious when looking at information averaged over a large city or county. It can be mis- leading and paint a false picture of the real market conditions in your business’ local primary trade area. v Mobile Echo Boomers (18-32) and Gen- X’ers (33-45) are seeking gainful employ- ment and brighter geographies near and far.What do housing price changes have to do withYOUR business? You don’t sell homes, but yourcustomers live in them, and the chunk of money leftover after paying their household’s monthly cost iswhat’s left over to spend on YOU!That’s why the very first thing we give you is afree 3L Score. If you haven’t already gotten a free3L Score of your business’ address, click here. Why You NOW Have An Unfair Today there are new areas of attractiveness for the Advantage Over Your Competition mobile Echo Boomers and Generation X’ers (Hint: they aren’t the suburbs of the major cities).In previous decades, regardless of the price range ofa neighborhood, one could count on a household Employment opportunities and lifestyle attrac-moving out to be replaced by a similar one (at least tion are driving these age cohorts to urban areas ofin terms of income). Not anymore! With home prices redevelopment and mid-size cities with great hous-dropping up to 50% and a continuous flow of fore- ing affordability and all around lower cost of livingclosures and short sales, this is no longer a trend attributes.
  2. 2. This movement to seek affordable housing and lower year, (before he found our website and the 3Lcost of living has also resulted in HUGE household Score), he spent big bucks on one of those conven-contraction. Meaning, the same number of individu- tional demographics reports. The 2010 Q3 reportals are living in fewer dwelling units. These radical showed an increased population density in one ofchanges in household makeup may be significantly his market segments. Naturally, Gary interpreted thiscontributing to the changes in your business. as a clear sign that the housing market was finally turning and new people were moving into the vacant dwelling units surrounding his business. Great news How Household Makeup for his furniture store, right? Directly Affects Your Business Wrong. Here’s THe realiTy:Household makeup will vary from marketplace tomarketplace within each age group. Whether there Although there was an increase in population den-is one person living in a household that is single or sity, the number of vacant dwelling units (houses,there are seven persons comprised of a complete apartments, condos, etc.) did NOT decrease. For ex-nuclear family, there will be significant variations in ample, Echo Boomers who moved into town weren’thouseholds among the three major age groups: Baby buying new homes or renting apartments, they wereBoomers, Generation X, and Echo Boomers. moving back into their Baby Boom parents’ homes. Result: No need to go to Gary’s furniture store to buy a new bedroom set when they’re moving into their parents’ already-furnished guest room. You may recognize this paradigm in your own resi- dential neighborhood today. Get out and talk with your neighbors and friends. They will give you great insight to these changes. We reemphasize this trend because it will continue to occur and become more and more prevalent in the unfolding decade. You can see where the stages of life (Echo Boomers, Generation X, or Baby Boomers) become meaning- ful, with respect to household makeup and buying behavior.It’s CRITICAL you know the household makeups inyour marketplace! w Baby Boomers (45-65) are in constrained spending patterns asAre there one or more income/wage earners? they save for retirement while trying to assist children andIf so, what is the combined annual income of the grandchildren.household? In the past five decades, the dominant paradigmHere’s a counter-intuitive story and perfect ex- was Baby Boomers growing up, moving out, andample of why it’s so important... then moving their family of Echo Boom children up the home “stair ladder”. Under this paradigm manyGary owns some furniture stores in Colorado. Last Baby Boomers ended up in “McMansion” suburbia.
  3. 3. Today, Baby Boomers have retirement in focus. AND REMEMBER...They want to move down to a manageable empty-nester space. They want to cash in equity. They Ignore national housing statistics when making stra-want to save. Almost 90% of Baby Boomers who tegic and tactical decisions for your local operations.choose to move stay within 50 miles of their current Specifically, ignore supply side indicators, such asresidence. The reason is to be closer to their grand- new home sales, resales, new starts, permits pulled,children. Less than 15% move out of state to Sunbelt and price changes.retirement communities. Why Are These Statistics So Dangerous?If your target market includes Baby Boomers you’reprobably wondering, They can be misleading and paint a false picture of the real market conditions in your business’ local “Will I lose them as customers?” primary trade area.Expect their buying behavior to change as they focus A thermometer taking the temperature of a patienton retirement. However, for many Baby Boomers may reflect a fever, but it says nothing about whethertheir dream has turned into a nightmare. They can’t the fever is related to pneumonia, the flu, an infec-sell the oversupplied/underdemanded McMansion tion, etc. It also does not say if the fever is going toand they aren’t “empty nesting.” The jobless re- get better or worse and how long ot will last. Thatcovery has one or more of their unemployed Echo requires a personal, site-specific diagnosis by a doc-Boomer kids (and a grandchild or two) living with tor – and that’s what the 3L Score is to your busi-them. The size of their household has not shrunk, it’s ness. Translated in a business sense, it specificallyINCREASED! focuses in on the unique wants, needs, concerns, and spending behaviors of your local, primary target market. What’s Your Next Step?Your immediate next step should be to measure thehousehold make up and average household incomeby age group of your market. You must have anunderstanding of the age groups who dominate theareas surrounding your business. Once you under-stand WHO now surrounds your business you willbe able to make better informed decisions aboutyour marketing efforts and product mix.Maybe you need to close down a location based onrecent changes, or consolidate two locations, or pos-sibly move to a new location that is loaded with thetype of customers your business serves.TIP: The “Willingness To Spend” algorithm ofthe 3L Score uses proprietary consumer purchaseweighting and will give you MAJOR insight intothe current consumer confidence of your marketsegment. Copyright © Catalyst Analytics, LLC | www.CatlystAnalytics.com |