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Copyright watt international 2009 Success at Retail in the Post-Recession Economy August 25, 2009 Patrick Rodmell President + CEO Watt International [email_address] Antony Karabus CEO Karabus Management Inc. [email_address] Paco Underhill Author: “Why we Buy: the Science of Shopping” [email_address]
An Overview of Watt International Line of Business:  Retail Consulting, Branding, Marketing + Design Brand Position:  Building Brands.  Building Business. Brand Pillars:  Collaboration. Inspiration. Innovation. Vision.   USP: Understanding how to motivate consumers Global authority in retail Left/Right Brain Solutions
research  +  insight branding marketing  + design strategy  +  consulting
We work internationally with retailers and product companies to help maximize their brand potential. Consulting practices Creative Agencies “ (watt international is) a unique group of talent people, encouraged to think beyond their specialty”…
Recession – Key insights The M-Powered Era How to win at retail in the M-Powered Era Al least one new idea to take home with you
Reality Check: The recession that began in December 2007 is close to an end, and will have lasted 21 or 22 months,  making it the longest downturn since the Great Depression .  Source: National Bureau of Economic Research and The New York Times
EMPLOYMENT: US unemployment rates are approaching 30 year highs…
EMPLOYMENT: …and the trend vs. other recent recessions is concerning Source; Federal  Catherine Rampell, The New York Times; April 3, 2009 Job loses in recent recessions, as share of employment
Source; Bloomberg; July 14, 2009 RETAIL SALES: US Retail Sales show a pretty gloomy picture 5% 0 (5%) (10%) 2007  2008   2009
RETAIL SALES: …and the Retail Sales Index presents an alarming trend Source:  St.Louis Federal Reserve Bank
US Retail Vacancy levels paint a bleak picture for retailers, landlords, governments… Source:  Marcus & Millcap Research Services 9% 8%  7% 6% 04 05 06 07 08 09 2009 Q1 = 9%
One-third of consumers have made “substantial” cutbacks in dining out, driving and everyday shopping.  (Source; Booz & Co.) 42% of Canadians are planning to take more  "staycations"  in the upcoming year. (Source; Booz & Co.) 84% of consumers who are cutting back on their spending believe that prices have recently increased -  price perception is likely to be an increasingly important issue. 8 out of 10 women have changed the way they shop for apparel, and are changing where they shop and switching to less expensive brands. “ These trends are likely to last beyond the recession .”  (source; Retail Forward) 53% of consumers are  still willing to pay for eco-friendly  products in this recession. CONSUMER ATTITUDES: The Recession-era Consumer
Consumer behaviour and the retail landscape are going to change dramatically in the post-recession era. But don’t blame the recession. The recession is simply accelerating changes that were already underway due to other factors; Too many stores and product options Shrinking middle class Concern for our environment Access to information anytime, anywhere.  CONCLUSION:
The customer is Mobile, Empowered, and fully in charge Copyright watt international 2009 The end of the “Abundance Era”; the beginning of
The M-Powered Generation Born +- 1988:  The coming consumer generation Don’t know life without the internet Short attention spans Don’t trust advertising – look to their social network.
Source: McGraw-Hill Research  Revenue Growth % over first five years after the recession Companies that  maintained  sales and marketing efforts during the recession Companies that  cut  sales and marketing efforts during the recession  19% This doesn’t mean you should stop promoting your brand 275%
The M-Powered Generation Mobile technology is a commodity Sensitive to our environment Developing their consumer DNA during the global recession. Born +- 1990:  The coming consumer generation Don’t know life without the internet Short attention spans Don’t trust advertising – look to their social network
CONSUMER ATTITUDES: Being “M-Powered” is a fundamental necessity  Source:  Morgan Stanley
Winning at Retail in the M-Powered Era Consideration for the environment will be mandatory
Consideration for the environment will be mandatory “ Choice” is a stress word - skus will be rationalized; stores will shrink – what will you do with the extra space? Winning at Retail in the M-Powered Era
Walmart’s Project Impact: 15% less skus (optimal sku selection)
Merchandise ($/sq. foot) Experience (Customer satisfaction) vs. What can you do that will enhance the experience and build loyalty with your customers?
 
 
Consideration for the environment will be mandatory “ Choice” is a stress word - skus will be rationalized; stores will shrink Consumers will be less brand loyal and more motivated by “Value” – disposable is out; durable is in  Winning at Retail in the M-Powered Era
 
Insert image here
Authenticity Today’s consumer is skeptical about marketing messages, looking for products and experiences that have a closer connection with a true human element. Being “Authentic” is a core brand value that is key to capturing consumer mindshare.
Consideration for the environment will be mandatory “ Choice” is a stress word - skus will be rationalized; stores will shrink Consumers will be less brand loyal and more motivated by “Value” – disposable is out; durable is in  Embrace  Consumer and Shopper-centric thinking Winning at Retail in the M-Powered Era
Developing product and packaging solutions with an understanding of how a consumer interacts with your product while they are  “consuming”  it “ Consumer-centric” defined:
 
 
1.  Who gets blamed when it doesn’t get cooked right?
Managing freshness:  making sure it’s  Ripe!
 
10.  …but Clorets perfected it!
Developing brand propositions, packaging, merchandising and store experiences with an understanding of what the customer is doing and thinking while they are  “shopping” “ Shopper-centric” defined:
This is soooo 1980s…
 
4.  Because when the lights go down, ‘red’ can look ‘pink’ (or so I’m told).
3.  At Hollister, the customer sets the tone…and stays until they hear it!
Thinking laterally about the mindset of your customer
The “Value Guru” Helping shoppers maximize value for money in the store.
 
Where does the customer experience begin and end?
 
 
Shopper insights = The Store as a Medium
Consideration for the environment will be mandatory “ Choice” is a stress word - skus will be rationalized; stores will shrink Consumers will be less brand loyal and more motivated by “Value” – disposable is out; durable is in  The winners at retail will be those who embrace  Consumer and Shopper-centric thinking The winners at retail will have integrated strategies  Winning at Retail in the M-Powered Era
Insights Strategy Insights Insights Insights Strategy Strategy Strategy What we see today Marketing Store Design Merchandising Operations A place that sells stuff
Insights Strategy What should be Marketing Store Design Merchandising Operations Customer loyalty An integrated, well-oiled customer experience
Our Philosophy Tactics Brand Strategy Business Strategy Marketing  Advertising , Website, Brochures, Catalogues,  Flyers, In-store signage HR Recruitment/Retention  Training  Incentives & Rewards Business Planning Store Formats Store Operations Price Programs Strategic Partnerships Offering National brands  Private label  Services Brand Name, Identity Colors, Fonts Internal Communications Public Relations Sponsorships  Events Launches Environment Architecture  Décor  Layout
 
 
Consideration for the environment will be mandatory “ Choice” is a stress word - skus will be rationalized; stores will shrink Consumers will be less brand loyal and more motivated by “Value” – disposable is out; durable is in  The winners at retail will be those who embrace  Consumer and Shopper-centric thinking The winners at retail will have integrated strategies  The winners will look for Competitive Edge; NOT Bleeding Edge. Winning at Retail in the M-Powered Era
Virtual Post-it Notes Using GPS technology, retailers and brands can leave text messages for consumers at a specific location, at a specified point in time. Technology with Competitive Edge
QR Codes Take a picture of the code; get special promotions Technology with Competitive Edge
Consideration for the environment will be mandatory “ Choice” is a stress word - skus will be rationalized; stores will shrink – enhance the experience with the extra space Consumers will be less brand loyal and more motivated by “Value” – disposable is out; durable is in  The winners at retail will be those who embrace Consumer and Shopper-centric thinking The winners at retail will have integrated strategies  The winners will look for Competitive Edge; NOT Bleeding Edge Winning at Retail in the M-Powered Era
Who’s calling the shots? The places we buy them The brands/products we buy
The Customer!
 
Brand   V  = R eality E xpectation alue
Copyright watt international 2009 Thanks for Joining us Today! [email_address]

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Rodmell M Powered Era

  • 1. Copyright watt international 2009 Success at Retail in the Post-Recession Economy August 25, 2009 Patrick Rodmell President + CEO Watt International [email_address] Antony Karabus CEO Karabus Management Inc. [email_address] Paco Underhill Author: “Why we Buy: the Science of Shopping” [email_address]
  • 2. An Overview of Watt International Line of Business: Retail Consulting, Branding, Marketing + Design Brand Position: Building Brands. Building Business. Brand Pillars: Collaboration. Inspiration. Innovation. Vision. USP: Understanding how to motivate consumers Global authority in retail Left/Right Brain Solutions
  • 3. research + insight branding marketing + design strategy + consulting
  • 4. We work internationally with retailers and product companies to help maximize their brand potential. Consulting practices Creative Agencies “ (watt international is) a unique group of talent people, encouraged to think beyond their specialty”…
  • 5. Recession – Key insights The M-Powered Era How to win at retail in the M-Powered Era Al least one new idea to take home with you
  • 6. Reality Check: The recession that began in December 2007 is close to an end, and will have lasted 21 or 22 months, making it the longest downturn since the Great Depression . Source: National Bureau of Economic Research and The New York Times
  • 7. EMPLOYMENT: US unemployment rates are approaching 30 year highs…
  • 8. EMPLOYMENT: …and the trend vs. other recent recessions is concerning Source; Federal Catherine Rampell, The New York Times; April 3, 2009 Job loses in recent recessions, as share of employment
  • 9. Source; Bloomberg; July 14, 2009 RETAIL SALES: US Retail Sales show a pretty gloomy picture 5% 0 (5%) (10%) 2007 2008 2009
  • 10. RETAIL SALES: …and the Retail Sales Index presents an alarming trend Source: St.Louis Federal Reserve Bank
  • 11. US Retail Vacancy levels paint a bleak picture for retailers, landlords, governments… Source: Marcus & Millcap Research Services 9% 8% 7% 6% 04 05 06 07 08 09 2009 Q1 = 9%
  • 12. One-third of consumers have made “substantial” cutbacks in dining out, driving and everyday shopping. (Source; Booz & Co.) 42% of Canadians are planning to take more "staycations" in the upcoming year. (Source; Booz & Co.) 84% of consumers who are cutting back on their spending believe that prices have recently increased - price perception is likely to be an increasingly important issue. 8 out of 10 women have changed the way they shop for apparel, and are changing where they shop and switching to less expensive brands. “ These trends are likely to last beyond the recession .” (source; Retail Forward) 53% of consumers are still willing to pay for eco-friendly products in this recession. CONSUMER ATTITUDES: The Recession-era Consumer
  • 13. Consumer behaviour and the retail landscape are going to change dramatically in the post-recession era. But don’t blame the recession. The recession is simply accelerating changes that were already underway due to other factors; Too many stores and product options Shrinking middle class Concern for our environment Access to information anytime, anywhere. CONCLUSION:
  • 14. The customer is Mobile, Empowered, and fully in charge Copyright watt international 2009 The end of the “Abundance Era”; the beginning of
  • 15. The M-Powered Generation Born +- 1988: The coming consumer generation Don’t know life without the internet Short attention spans Don’t trust advertising – look to their social network.
  • 16. Source: McGraw-Hill Research Revenue Growth % over first five years after the recession Companies that maintained sales and marketing efforts during the recession Companies that cut sales and marketing efforts during the recession 19% This doesn’t mean you should stop promoting your brand 275%
  • 17. The M-Powered Generation Mobile technology is a commodity Sensitive to our environment Developing their consumer DNA during the global recession. Born +- 1990: The coming consumer generation Don’t know life without the internet Short attention spans Don’t trust advertising – look to their social network
  • 18. CONSUMER ATTITUDES: Being “M-Powered” is a fundamental necessity Source: Morgan Stanley
  • 19. Winning at Retail in the M-Powered Era Consideration for the environment will be mandatory
  • 20. Consideration for the environment will be mandatory “ Choice” is a stress word - skus will be rationalized; stores will shrink – what will you do with the extra space? Winning at Retail in the M-Powered Era
  • 21. Walmart’s Project Impact: 15% less skus (optimal sku selection)
  • 22. Merchandise ($/sq. foot) Experience (Customer satisfaction) vs. What can you do that will enhance the experience and build loyalty with your customers?
  • 23.  
  • 24.  
  • 25. Consideration for the environment will be mandatory “ Choice” is a stress word - skus will be rationalized; stores will shrink Consumers will be less brand loyal and more motivated by “Value” – disposable is out; durable is in Winning at Retail in the M-Powered Era
  • 26.  
  • 28. Authenticity Today’s consumer is skeptical about marketing messages, looking for products and experiences that have a closer connection with a true human element. Being “Authentic” is a core brand value that is key to capturing consumer mindshare.
  • 29. Consideration for the environment will be mandatory “ Choice” is a stress word - skus will be rationalized; stores will shrink Consumers will be less brand loyal and more motivated by “Value” – disposable is out; durable is in Embrace Consumer and Shopper-centric thinking Winning at Retail in the M-Powered Era
  • 30. Developing product and packaging solutions with an understanding of how a consumer interacts with your product while they are “consuming” it “ Consumer-centric” defined:
  • 31.  
  • 32.  
  • 33. 1. Who gets blamed when it doesn’t get cooked right?
  • 34. Managing freshness: making sure it’s Ripe!
  • 35.  
  • 36. 10. …but Clorets perfected it!
  • 37. Developing brand propositions, packaging, merchandising and store experiences with an understanding of what the customer is doing and thinking while they are “shopping” “ Shopper-centric” defined:
  • 38. This is soooo 1980s…
  • 39.  
  • 40. 4. Because when the lights go down, ‘red’ can look ‘pink’ (or so I’m told).
  • 41. 3. At Hollister, the customer sets the tone…and stays until they hear it!
  • 42. Thinking laterally about the mindset of your customer
  • 43. The “Value Guru” Helping shoppers maximize value for money in the store.
  • 44.  
  • 45. Where does the customer experience begin and end?
  • 46.  
  • 47.  
  • 48. Shopper insights = The Store as a Medium
  • 49. Consideration for the environment will be mandatory “ Choice” is a stress word - skus will be rationalized; stores will shrink Consumers will be less brand loyal and more motivated by “Value” – disposable is out; durable is in The winners at retail will be those who embrace Consumer and Shopper-centric thinking The winners at retail will have integrated strategies Winning at Retail in the M-Powered Era
  • 50. Insights Strategy Insights Insights Insights Strategy Strategy Strategy What we see today Marketing Store Design Merchandising Operations A place that sells stuff
  • 51. Insights Strategy What should be Marketing Store Design Merchandising Operations Customer loyalty An integrated, well-oiled customer experience
  • 52. Our Philosophy Tactics Brand Strategy Business Strategy Marketing Advertising , Website, Brochures, Catalogues, Flyers, In-store signage HR Recruitment/Retention Training Incentives & Rewards Business Planning Store Formats Store Operations Price Programs Strategic Partnerships Offering National brands Private label Services Brand Name, Identity Colors, Fonts Internal Communications Public Relations Sponsorships Events Launches Environment Architecture Décor Layout
  • 53.  
  • 54.  
  • 55. Consideration for the environment will be mandatory “ Choice” is a stress word - skus will be rationalized; stores will shrink Consumers will be less brand loyal and more motivated by “Value” – disposable is out; durable is in The winners at retail will be those who embrace Consumer and Shopper-centric thinking The winners at retail will have integrated strategies The winners will look for Competitive Edge; NOT Bleeding Edge. Winning at Retail in the M-Powered Era
  • 56. Virtual Post-it Notes Using GPS technology, retailers and brands can leave text messages for consumers at a specific location, at a specified point in time. Technology with Competitive Edge
  • 57. QR Codes Take a picture of the code; get special promotions Technology with Competitive Edge
  • 58. Consideration for the environment will be mandatory “ Choice” is a stress word - skus will be rationalized; stores will shrink – enhance the experience with the extra space Consumers will be less brand loyal and more motivated by “Value” – disposable is out; durable is in The winners at retail will be those who embrace Consumer and Shopper-centric thinking The winners at retail will have integrated strategies The winners will look for Competitive Edge; NOT Bleeding Edge Winning at Retail in the M-Powered Era
  • 59. Who’s calling the shots? The places we buy them The brands/products we buy
  • 61.  
  • 62. Brand V = R eality E xpectation alue
  • 63. Copyright watt international 2009 Thanks for Joining us Today! [email_address]

Editor's Notes

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  3. Leading Indicators Are Signaling the Recession’s End, July 25, 2009, The New York Times
  4. http://www.functionalingredientsmag.com/article/NorthSouth-America/canadians%20optimistic%20shoppers.aspx
  5. Comparing the Recession to Earlier Ones, April 3, 2009, Catherine Rampell, The New York Times
  6. From New York Times on line edition August 10, 2009, Economic Indicators
  7. The ICSC states that 5,770 national chains will close in 2008 . Women’s specialty retailers have been especially impacted by the ongoing economic recession. Retailers in the segment such as Claire’s, Bon Ton, Ann Taylor, Coldwater Creek, Chico’s, and Limited Brands have all reported varying quarterly and annual losses in sales Total housing starts this year are expected to be at their lowest level since 1945. Retail vacancy hit 9% nationwide in Q1 of 2009, and the National Association of Realtors predicts that the retail vacancy rate will rise to 15.8% in 2010 1. – 2. July 2009 S&P Current Environment Report for Apparel & Footwear 3. Marcus & Millichap, Investor’s Business Daily, Wed June 10, 2009
  8. 1.-2. Canadians Are Committed To Investing In Their Homes, CNW, December 15, 2008 3. Spending for Food Gas and other consumables during the recession, May 25, 2009, 8 Sages (Survival and Growth Enterprises) 4. TNS 5. Business Week, Retail Sales Post an Unexpected Decline, Phil Mintz, May 13, 2009/Retail Forward
  9. 1.-2. Canadians Are Committed To Investing In Their Homes, CNW, December 15, 2008 3. Spending for Food Gas and other consumables during the recession, May 25, 2009, 8 Sages (Survival and Growth Enterprises) 4. TNS 5. Business Week, Retail Sales Post an Unexpected Decline, Phil Mintz, May 13, 2009/Retail Forward
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  11. Consumer centric solutions involve creating experiences that respond to the immediate and anticipated needs of the consumer In the retail environment In the product experience In the holistic presentation of your brand By looking at trends and opportunities in the marketplace today we can learn how the retail space, the product and the brand as a whole can adapt to inspire the consumer to continue their patronage and cement loyalty, or even to shop in new ways. Some of the trends that are making a big impact on consumer-centric solutions today are:
  12. “ During Slow Times From 1980 to 1985, McGraw - Hill Research analyzed 600 companies and their marketing spending. After 1985, McGraw - Hill concluded that those firms which had maintained or increased their advertising during the recession in ’81-’82 boasted an average sales growth of 275% over the next five years. But those companies who cut their advertising saw paltry sales growth over the next five years of just 19%. When is the right time to market your business? All the time. One thing to note is that the analysis does not specify how the marketing and sales investment was allocated between new and established brands. Still, the point is that if companies can continue to invest during the economic downturn, they will likely emerge in a much stronger position
  13. Consumer centric solutions involve creating experiences that respond to the immediate and anticipated needs of the consumer In the retail environment In the product experience In the holistic presentation of your brand By looking at trends and opportunities in the marketplace today we can learn how the retail space, the product and the brand as a whole can adapt to inspire the consumer to continue their patronage and cement loyalty, or even to shop in new ways. Some of the trends that are making a big impact on consumer-centric solutions today are:
  14. The graph to the right indicates that communication-related technologies were the least vulnerable to reduced consumer expenditure in late 2008 among W European countries.
  15. 3. Spending for Food Gas and other consumables during the recession, May 25, 2009, 8 Sages (Survival and Growth Enterprises)
  16. 3. Spending for Food Gas and other consumables during the recession, May 25, 2009, 8 Sages (Survival and Growth Enterprises)
  17. REI – the ultimate experience retail – note pickax as door handles
  18. 3. Spending for Food Gas and other consumables during the recession, May 25, 2009, 8 Sages (Survival and Growth Enterprises)
  19. Lowering your prices is one thing, offering innovative ‘recession-proof’ products and services is another. Keywords: durability, advice and efficiency*. Clever examples: Parents know better than anyone how expensive it can be to buy a new pair of shoes every time a child goes through a growth spurt. InchWorm Shoes (www.inchwormshoes.com) provide a solution to that problem with their iFit technology, which allows the wearer to increase the size of his or her shoes by pushing a button and pulling on the toe. INCHworm shoes grow in half-size increments and have the capacity to stretch three sizes. Expect price transparency to become even more popular, especially as straightforward comparison makes way for tailored advice on how to save money: www.trendwatching.com
  20. Newsstand book retail concept, where consumer can return the book (once read) for a 50% refund) – a great example of changing consumerism towards value and ecologically-based purchasing. Image taken in the Cincinnati Airport by Patrick Rodmell (03/09).
  21. 3. Spending for Food Gas and other consumables during the recession, May 25, 2009, 8 Sages (Survival and Growth Enterprises)
  22. Customers of Marks & Spencer can buy a Microwave oven fitted with a scanner that reads the bar code of meals marked with the “Smart Oven” icon. The oven then cooks the meal at the settings stored in the code.
  23. Macy’s flexible wayfinding.
  24. Adjustable lighting in a fashion retail store in India.
  25. Holisters video wall, showing a live feed from the beach in California. They also have a juke box that allows their youthful customers pick the music to play in the store.
  26. Whole Foods Market, who entered the market with a focused, “retail-push” approach to their target market is continually re-adapting their offering beyond the core to suit the demands and needs of the customers and their lifestyles in a “consumer-pull” market. Staff at Whole Foods are hired to specialize in categories of the store with superior knowledge of products, saving consumers time As a solution to consumer economic pressures, Whole Foods “ value gurus ” are offering bargain tours of its stores.
  27. White hens self-ordering sandwich kiosk is a great service and minimizes store labor.
  28. Changroom designs in a sporting goods store
  29. 3. Spending for Food Gas and other consumables during the recession, May 25, 2009, 8 Sages (Survival and Growth Enterprises)
  30. 3. Spending for Food Gas and other consumables during the recession, May 25, 2009, 8 Sages (Survival and Growth Enterprises)
  31. Network TV is just one of the training grounds for tomorrow’s consumer to use their mobile devices as a much more broad-based commercial tool. Many cell phones are now equipped to read bar codes, so the potential to scan codes and obtain product information will soon be mainstream. The possibilities are almost endless for ways in which businesses can connect with customers through mobile devices. Let me give you a few examples: Engineers in Britain have devised a way to attach virtual messages to locations in space, such as a street address, to be picked up by a user’s cellphone as they pass through the vicinity of the message. So imagine the commercial applications – retailers and brands can send promotions and incentives to targeted customers at specified locations – say, within the parking lot area of a store – offering them exclusive deals if they come and buy...within set time periods. In Japan, there are currently thirty million users of cellphones equipped with Quick Response – or QR – Codes Readers. The user simply takes a picture of a QR code from a billboard or print ad, then go directly to special promotions through their phone. Also in Japan, Amazon.com enables consumers to use their cell phone to read a barcode and instantly get directed to Amazon.com, where they are presented the option to purchase the exact same product , at a lower price.
  32. 3. Spending for Food Gas and other consumables during the recession, May 25, 2009, 8 Sages (Survival and Growth Enterprises)
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