By Jerry Kamhi, M1 Affiliate;

If you find yourself on unfamiliar ground and thinking it is next to impossible to succeed in this new and constantly changing retail marketplace you’re not alone. What’s going on is unprecedented, at least in my experience,” said Allen Questrom, former chief executive officer of J.C. Penney Co. Inc., Federated, Barneys New York and Neiman Marcus Inc.

“This is the deepest consumer retrenchment I have ever witnessed. It’s like someone turned out the lights and the world changed. ” We are experiencing an unprecedented Marketplace. It’s different than just months ago and one that we have not experienced in our own lifetime.

Says Ron Frasch, Saks Fifth Avenue Executive Vice President, “If
you’re off 1/30th of an inch, you have no chance.”

The Economy has forced consumers to rethink everyday purchases
and justify each one of them.

The Pop Culture in-vogue term “Fashionista” has quickly been replaced
with an appropriate play on words…“Recessionista”. Of course, there
is the ubiquitous blog to chronicle cheap and chic choices:
www.therecessionista.blogspot.com

Value, a blend of quality, style and price, is the new mantra. It never
really disappeared. It just got completely distorted by the branding and
marketing of the retail bubble that was created by “luxury” products, just
like the housing market. Now we’re talking values evil alter ego… frugality.
It’s harder to convince a frugal customer to part with their money
when the customers mindset is “reduction of waste, curbing costly habits
suppressing instant gratification by means of fiscal self-restraint” as
defined by Wikipedia.

“Those arguing that this deep and long recession has ushered in a new
mood of frugality among consumers got more ammunition from Visa’s
April 29 earnings report”, MSN Money, May 2009. Visa reported that,
for the first time ever, it saw the dollar value of purchases made using
its debit cards surpass the value of purchases made with its creit cards.
Advocates of the new-frugality paradigm say this is evidence of consumers’
desires to live within their means and control their spending.

Here’s what the marketplace is saying:
“Experts said the trend toward fundamentals should convey a message
to companies navigating the challenges of economic turmoil: Don’t
abandon the core customer or the core message and put as much emphasis
as possible on value”, WWD, March 18, 2009.

“However, now we must look at creating new value in what we sell and
aligning that to price models until we recognize an increase in demand”,
Marc Weiss, Managing Partner, Management One

“This thing comes at the Bermuda Triangle of the culture,” said futurist
Faith Popcorn, founder of Faith Popcorn’s BrainReserve. “Ethics, the
environment and the economy are all failing at the same time.” The
consumer can now really discern value for money,” she said. “People
perceive what’s fake. Now we want the truth.”
“There is definitely one collective mind-set across all consumers at the
moment: People want to control the things in their lives that they can
control,” said Phil Rist, executive vice president, Strategic Initiatives at
BIGresearch, a consumer and retail research firm based in Worthington,
Ohio.
Tiffany’s Holiday 2008 season came under tremendous stress when the
aspirational customer who had been purchasing the company’s entry
level baubles stopped indulging. “The party is over for the fancy labels
that once scored big on $600 stilettos and $1,500 “it” handbags. This
year, world-wide sales of luxury goods are expected to fall between 3%
and 7% from a year earlier, according to a Bain & Co. study,” Wall St.
Journal, January 30, 2009.

One of the few recent success stories Decker Outdoor, positioned well
with its Ugg brand, was fortunate to find itself at the forefront of the
change to value and comfort over style and panache. They’re almost
alone. “If it seemed like those sheepskin baked potatoes were on everyone’s
feet last year, that’s because they pretty much were, with sales
growing a whopping 57%”…“The Big Money asked luxury and footwear
analysts to break out the crystal ball and describe the sector in 2009, so
we’ll know what to expect when we pull on our Uggs to go shopping.
Retailers and manufacturers are going to have their hands full reinventing
their offerings to align with new consumer tastes — and budgets”,
MSN Money, February 9, 2009.

So as the consumer trades down to what each specific target segment
believes to be their own individual Plan B it’s become a guessing game
as to how it will all turn out for the retail world. Andrew Sacks, president
of marketing and intelligence firm Agencysacks comments, “You’ve got
about seven or eight consumer revolutions under way, and no trend
observer or researcher or consumer behaviorist has a clue as to what
the world will be like on the other side,” he said.
Will my brand make the cut? Will my target customer be trading down?
Is there an opportunity to get someone else trading down to my brand?  Isn’t one man’s ceiling another man’s floor? Or is it the other way around? And this mind-set is affecting all components of the retail world not just fashion. People are making purchasing decisions that they can control which are affecting the food and restaurant business.

“Another key thing we are finding is that there are people in the parking
lot of Trader Joe’s and ALDI, and Goodwill and the dollar stores, which
were never there three years ago. The demographic profile of people
willing to shop down is expanding.”

Statistics from Zagat indicate that 33% of restaurant patrons across the
country are paying more attention to prices and that 28% of diners are
switching to cheaper restaurants, MSN Money, February 19, 2009.
And from the health and wellness industry…

“People are saying that they’re not going to buy the ‘it’ purse, but the
last thing they’re going to give up is the stuff that makes them look good
everyday,” says dermatologic surgeon Dr. Tina Alster of the Washington
Institute of Dermatologic Laser Surgery.

Add to that the uncertainty at the retail distribution level. Who will be in
business? What vendors will be on the retailers’ short list? Who has the
financial backing to pass the credit test? How do I manage my inventory
in times like this? Where’s the opportunity to perform? That’s certainly
not to say there isn’t opportunity. Just read, “Opportunity Knocks for
Footwear Companies”, Footwear News, February 9, 2009. “Dismal financial
reports, store closings and job cuts continue to dominate the
headlines…Yet there are still big opportunities for footwear firms”

Here’s one retailer’s strategy…
“For the first time, J.C. Penney Co.’s spring advertising campaign will
focus only on its most fashion-forward clothing lines…The move is part
of a bid by the mid-tier retailer to appeal to shoppers who in the past
have turned to high-end stores and boutiques for the latest looks in
fashion but have cut back on spending”, The Wall Street Journal, Tuesday,
February 10, 2009

Lord & Taylor is taking market share from higher-end merchants by offering designer looks for less, says Richard Baker, CEO of NRDC Equity
Partners, which owns Lord & Taylor. He cites $89-to-$350 shoes
with “the look of Gucci and Prada — styles that can cost $700.”
But is that enough to achieve “game changing” breakthroughs?

Where does this put your Brand Image today? Understanding your market
is imperative but creativity goes a long way. When it was easier
even 6 month’s ago it was primarily about the Brand. Not so sure anymore.
The one thing that’s for sure it’s about is…product. A brand’s got
nothing without creative product on the shelves and creative solutions
to all of the customer’s retail experiences. Today’s world starts right
there and product today means value…style, quality, and price. “Brands
need to convey in different ways that companies have the consumers’
best interest at heart. Firms…have to make a profit, but you have to
have your consumer at the forefront,” said Gerald Zaltman, professor
emeritus at Harvard Business School. “Right now, you have to connect
and demonstrate how your company, how your brand, offers a positive
experience for your consumer.”

Once again, here’s what the marketplace is saying:
“We have to get back to creating innovative product, concepts and merchandising ideas to stimulate and energize the customer,” said Andrew
Rosen, president and co-founder of Theory.

“Instead of making a certain number of models, you make less,” explained
Stefano Gabbana, chairman of the design house. “But this has
nothing to do with creativity….
Jean-Jacques Picart, a Paris-based industry consultant, “creativity was
channeled in service of the image and desirability of fashion brands,
whereas in the future, “creativity will serve the product,” he explained.
What makes Zara great is design integrity,” he said. “The garment in
the store actually looks like the sample and the sample actually looked
like the sketch. So you really have something that looks like fashion, not
some hodgepodge, lowest common denominator design. For the consumer
at Zara, that’s quality.” Rethinking the Merchandise Formula,
WWD, April 2009
Massimo Ferretti, executive chairman at Aeffe SpA, “Creativity remains the key to recovery.”

To be competitive there is no room for error in today and tomorrow’s
Marketplace. The lines between traditional wholesaling and retailing
have become blurred and companies need to position themselves strategically to perform for and at the consumer level…to capture their
imagination with product, branding and make money while doing it all.

Here’s a creative solution…
A sign of the times: For his fall 2009 runway show, designer Graeme
Black switched up his front-row lineup. He invited personal shoppers
from stores such as Browns in London so they could see the collection
firsthand. “The only way we’re going to move forward is to connect directly
with the customer,” said Jonathan Reed, Black’s business partner.
J Crew is opening men’s only stores…. “We see a lot of opportunity for
the long-term positioning of men’s business. As we look at the landscape,
we believe there’s not enough choice out there for hip, cool,
high-quality clothes that are edited carefully. And then you factor in the
price, and it’s clear that we offer more value.”

And here’s yet another retailer, Bonobos, with a creative solution.
“There was a hole in the men’s shopping market,” said Dunn, adding
that the brand broke even in its first full year. “Our vision is to build a
100 percent Web-driven, premium men’s brand. We wouldn’t have
been able to raise $3 million if it weren’t working.”

So with so many fundamental and cultural changes, so many problems…
so many tactical fire drills what’s a retailer to do? Lower my price
points, reduce the overhead, drop vendors, find new vendors, cut the
cost of my goods, increase my margins, fire the cashier, fire the consultant,
hire a consultant, only buy what sells, mark everything down,
cut the advertising budget, stop traveling to market, start traveling to
market, change the pay scale, and on and on.
Sure these are all the business items you can control but none of them
provide the “game changing” breakthroughs necessary to make a real
sustainable difference. The bottom line…
How can your Creative Strategy differentiate your business from
the Marketplace and make money?

What’s Your Creative Strategy?
A Creative Strategy is at the core of what the retail business is about.
The very definition of fashion is about change and creativity. Creativity
in the retail business isn’t an option it’s mandatory. Creativity takes
work and commitment. What’s the definition of insanity…doing the
same thing over and over again and expecting different results?
Try these for stumbling blocks to your business success.

  • Every good idea degenerates into work.
  • If you are bored, your business will be boring.
  • If you are frustrated, your employees will be frustrated.
  • If you are unhappy, your customers will be unhappy.
  • If you don’t use your imagination your competitor will.

Robert Qually, founder and president of Qually Communications, says
in his 101 Ways to Kill a Concept manifesto, “What people really mean
to say, but would never openly admit they are innately afraid of anything
that is new, improved, unique, different, and/or better, anything that acts
like a catalyst for change and/or things they are not familiar with and/or
anything that annoys. Threatens, or harms their ego, status, power or
livelihood.”
“We do not forget that, even in a period of economic crisis, luxury products
cannot afford to leave out ingredients like dreams, desires and
aesthetic gratification, which end up representing one’s very essence”…
Massimo Ferretti, executive chairman at Aeffe SpA
But creativity without structured implementation is just ideas run amuck;
Unrealistic dreams with even more unrealistic goals.
By Jerry Kamhi
President
ThinkFAST Retail StrategiesTM
Copyright 2009 by ThinkFAST, Inc. All RIGHTS RESERVED