How Do You Give People What They Want?

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The Global Recession has left retailers with overstuffed inventories and rapidly declining margins, as cash-strapped consumers pulled back on all but the most necessary of purchases. In response, some retailers have revamped the consumer experience with a variety of strategies, from flashy celebrity endorsements and hefty back-to-school discounts, to new pricing strategies and a more holistic approach to in-store versus online.

But are any of these giving consumers what they really want?

Leveraging the power of celebrity appeal is a popular tactic that shows no signs of slowing. Ann Taylor recently announced that Kate Hudson will continue to be their spokesperson for the third year running, while H&M recently revealed its continuing partnership with David Beckham.

Despite the prevalence of star-powered promotion, 3% of consumers cite celebrities as being most likely to influence them to purchase new apparel, though 22% say clothing worn by celebrities is still influential in their own clothing choices, according to the Cotton Incorporated Lifestyle Monitor™ Survey. Most say (53%) friends are the most influential source in their purchasing decisions.

This year’s back-to-school retail push is another such example of an industry-driven event that did not quite match consumers’ shopping habits. Teen Vogue’s Back to School Saturday on August 11 was designed to bring retailers together in a coordinated effort across the country, with live performances, fashion shows, and special discounts and giveaways, to encourage consumers to get out early and save. Concerned with high prices, though, consumers instead seemed willing to wait until the school year had begun in order to snag the best deals. “Our research indicates that year over year, consumers are willing to wait for end-of-season sales to make purchases, rather than paying full price at the beginning of a season,” says Kim Kitchings, Vice President, Corporate Strategy and Program Metrics, Cotton Incorporated. “That behavior held true for back-to-school shopping this year, and was likely influenced as much by habit as by tighter consumer budgets and record-setting warm weather.”


One retailer’s recent attempt to simplify the bargain hunt was met with confusion and skepticism. JC Penney came under fire earlier this year for its revised promotional pricing structure that offered a three-tiered approach of “Daily Deals,” “Month Long Value,” and “Best Price;” as opposed to a series of incremental reductions to artificially inflated prices. Consumers failed to embrace the notion of a “square deal,” which ran counter to the more familiar circle of sales, and the retailer abandoned the strategy six months after it began.

“It is no surprise that consumers are above all concerned about price,” says Kitchings. “The challenge to retailers is not just to communicate product value relative to the price tag, but to enhance the overall retail experience as an added value.”

JC Penney has since announced it will continue offering free haircuts for children, hoping this added value will woo consumers back in store. Meanwhile, Walmart has seized on layaway as a means to ease the pressure its shoppers may be feeling as the holiday season nears. This year, the retailer has brought back layaway ahead of the holiday season, and simplified fees associated with the service. Other chains that have historically offered layaway, including Sears, Kmart, and Toys-R-Us, have rolled it out again as well.

That should resonate well with consumers, most of whom are not feeling optimistic about their personal financial situations and are concerned about their future income. Currently, just 37% of U.S. consumers are very or somewhat optimistic about the U.S. economy, up significantly from last year (34%), but still well below pre-recession levels and levels seen in 2007 (45%) and 2006 (47%), according to Monitor data. And only 48% of consumers are very or somewhat optimistic about their own personal financial situation. Meanwhile, nearly eight out of 10 consumers (78%) are very or somewhat concerned about a reduction in their household income.

Ultimately, it may be a more holistic approach to retail that works for consumers, merging shopping channels and making it simpler for consumers to save time and money. Some retailers report bringing the online experience in-store for both efficiency and experiential reasons, according to a recent report in Stylus: “Digital and retail consultants such as Kokley and Lilitab are integrating screens into retail space to further inform customers about products and promotions, and save them time at check out.”


This seems to dovetail with consumers’ shopping habits, as now a whopping 48% of consumers say they browse the Internet for clothing on their smartphones, and that percentage jumps to 55% among consumers making $75,000 or more per year. “Smart phones are still primarily being used for informational purposes, to price check, for example,” Kitchings says. “But as the technology gets faster and more efficient, we expect to see the number of consumers actually purchasing items on their smart phone to increase.”

It also may enable retailers to tailor the consumer experience without alienating online or in-store. Bringing iPads in-store is one mechanism; enabling consumers to shop online but pick up in store, for example, is another. Nordstrom and Sears both offer this option, and other retailers are catching on.

“The retail industry is changing,” Kitchings says. “In-store is moving online, and online is moving in-store. Consumers are more informed and more specific in their purchasing needs than they ever have been, but the technology is rapidly advancing to meet those needs. If retailers can provide unique, personalized experiences for their consumers, that may be what moves the needle for them.”



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