When Will Retailers Get Real?
Almost every retailer is struggling with same store comps this year. The energy dividend has gone away and as an industry many companies are in absolute denial that the world of retailing is changing dramatically and customers are struggling to find a reason to come into their stores. A few facts to set the stage.
- The average household income in 2015 was still 8% lower than it was in 2007
- The bottom 90% of households by income lost ground in the recovery since the recession ended in 2009. (114% of the income increase since recession ended has gone to top 10% of income earning households.)
- Healthcare premiums have risen an average of 8%-36% in 2016.
- There are now over 64 Million Amazon Prime Members (representing over 50% of US Households), and in the top 30 markets they can get products delivered to their door in as little as an hour. And the number of Prime members has been growing at a 50% compound annual growth rate.
One thing that hasn’t changed is that most retailers have paid no attention to the 4 facts above in how they reach out to customers. It’s same old, same old. When will retailers get real?
Customers are dealing with real life issues. Lower earnings, higher costs, and nearly all are dealing with real life issues that retailers simply ignore. For decades we have heard that that consumers respond only to aspirational retailing. There has most certainly been merit to that in the past, but does it still apply in your stores? It might, but if comps are down 5-10% maybe something is changed? Maybe they can’t afford that aspiration? Those are hard questions that retailers must ask themselves. Do the old axioms of aspirational retailing still apply? Is their time worth more than your aspirational view of what their lives should be? Tough questions indeed and no two answers are the same.
One demographic change that can’t be denied is that Baby Boomers and Gen Xers are dealing with those Sandwich Generation times of dealing with aging parents as well as kids (often adult kids back from college). A few years back my friend Ed Martin asked me to try and work with he and Leeza Gibbons to convince a retailer to take on the concept of marketing and connecting with caregivers, those who find themselves dealing with a parent with dementia, or cancer, or some other ailment. There is a market there, a huge one, but we could find no takers.
Another one that has always perplexed me is we paint the retail world pink in October for breast cancer awareness and research which no one can argue is not a great cause. But what are retailers doing for someone that actually has breast cancer? Someone that’s in the throes of it now? I’m not talking about employees, but rather your customers. Every single one of us has a friend or family member battling cancer right now. That’s a pretty big market. Yet, this excellent article from my friend Stephanie Sandler spells out the frustrations of shopping, of maintaining her dignity, of fighting through the frustration when there doesn’t seem to be anything out there in traditional retail that actually helps.
This is just one of many real issues that people are facing…and just think of the PR and Social Media benefits that come along with the stories of how you are a retailer that actually cares about who their customers are now, not just what you believe they aspire to be. Or you can just abdicate these markets to Amazon and continue business as usual.