Earlier this month, at the Retail Week Conference in London, there appeared to be a gloomier mood prevailing compared to the upbeat one at NRF in January. Certainly there were enough presentations on the economic scenario for the rest of this year that would make anyone gloomy. Tax rises, a public debt figure that is escalating, possible interest rate rises…the list goes on. Translated into retail-speak, it all seemed to add-up for UK businesses to mean falling consumption, rising costs and falling profits.
Luckily for the optimists attending the conference, there were also enough senior retailers presenting who argued that there was no point worrying about these issues. All need to be factored into planning and budgets but the real challenge and opportunity was to move forward. It has been argued that the way that the recession has affected consumer psychology is a bit like a bereavement which is characterised by three phases. Firstly there is the “acute distress” followed by stage two, “acceptance”. For consumer insight specialists at WPP who have done work on this, they believe consumers around the world have come through to stage two but are not yet ready for “moving on” which is stage three. Acceptance is also probably where many retailers are. One senior department store retailer argued that there was no point moping about the situation and simply meant they had to get back to basics and be “even better shopkeepers”.
Judging consumers right if everyone is still feeling fragile and anxious is the real task. But people are still happy to be seduced by great new products. Witness the scenes in the UK last week when the first 3D televisions went on sale. Look at the reaction to the imminent launch of the iPad from Apple. Look at the scenes at H&M stores around the world when they launch every designer collection.
People still want to feel good and treat themselves. Food retailers are already reporting that their more expensive, luxury food ranges are recovering sales after the previous move towards “basics”.
There was also research presented at the Retail Week Conference which set out how a large group of consumers were asked to “blind” compare the quality of a plain T shirt - from a top of the range brand down to a supermarket product. Stripped of any logos or brand names, the consumer panels elected to select the cheapest as the best quality. It was held up as an illustration of how well the supermarkets are doing to build their clothing businesses and the evidence is clear. But doesn’t it also illustrate that if you put the logos back, a sizeable number of those consumers would have bought the top priced one because of what it meant to them and their aspirations. Brands matter.
The trick is in giving people what they want and knowing how to inspire them.