The silver lining in the retail storm

Gwen Morrison

The Store is WPP's retail hub, which focuses on providing guidance to advertisers about retail best practice, for those operating both in and out of the WPP network. Point of purchase, use of in-store activations and digital marketing are some of the retail elements that The Store concentrates on to gain a deeper understanding of shopping behaviour.

Spending diet

In her presentation, 'Retailing in the recession - finding the silver lining', Morrison indicated that there is a definite shift in shopping behaviours, with consumers opting out or slowing down on many shopping activities. "Financial institutions have disappeared, consumers are on a spending diet and inflation is reversing deflation," she says.

In the US, discount remains king. Retailers that still provide consumer discounts are gaining market share. Judy van Dam, Managing Director of JWT Johannesburg explains that we're seeing similar patterns in the South African market. "Companies like Shoprite and Mr Price have been gaining steady share over the past few months as consumers tighten their belts. They still want to buy quality chocolates and coffee, but will buy them at a cheaper price. Similarly with clothing, good deals are a must for today's consumer," she says.

Timing

'Paycheck Marketing' is another concept Morrison discussed which, she says, is knowing when the consumer has cash in their pocket. It is imperative that marketers focus their advertising and communication around these times. "For instance, some Americans tend to have money to spend only in the first ten days of the month," she says.

Morrison went on to say that credit card usage is down, liquidation is the new reorganisation and the idea of value has changed. Consumers want high quality goods at a low price, but she issues a warning to marketers, "be careful not to cheapen your brand and always stick to your core product values and strategy".

Basic vs luxury buys

Judt van Dam

Another trend seen abroad and locally: people are buying the basics and leaving the luxury items until they can be afforded again. According to Morrison, two types of shoppers are emerging in the US recession market - the Income Statement Shopper, keeping tight control of budgets and only spending where there is extra money and the Balance Sheet Shopper, those who compare their assets, liabilities and past market investments. The latter shopper is not feeling secure even though their income remains static.

Responsibility is taking on a completely new meaning in the US marketplace. Consumers are being very strict about living within their means, taking responsibility for their own actions, taking a greater interest in looking after their health and the environment. In the current market, some US consumers are blaming their government for being too lenient in the past by providing loans to the public too easily.

Staying positive

Interestingly, the sales of 'feel good' books are on the increase. Even commercial messages are portraying a more positive attitude like Pepsi's 'You can do it' slogan.

In terms of product development, the US is showing a move to 'waste defiance' packaging - a plastic ice cream container doubles as a kid's toy after use. Local businesses are being supported furiously. "There is a sense of community and local bookstores for instance are obviously feeling the pinch, the community wants to keep these businesses alive," says Morrison.

Sales of homemade goods are also increasing, owning a hybrid car provides a sense of doing good for oneself and the planet. Attitudes are changing - buying 'small' furniture creates a perception that the consumer has more space in the home.

Stay true, keep communicating

Wrapping up the presentation, Morrison concluded with final words of advice to marketers. "It's crucial that businesses generate cash to stay alive; stay true to your brand; strengthen trust with the consumer and communicate with your customer all the time."

Van Dam reiterates the importance of doing business differently and always keeping the consumer in mind. "As advertisers, we need to be vigilant in communicating messages that will resonate with the consumer. It's imperative to offer value adds, be honest with the consumer, speak to them on a peer to peer level and understand their concerns and limitations in this current marketplace," she says.