Retailing: Revolution or Regression? -- Part Two
Stretching back to the beginnings of recorded history, bazaars and trade fairs emanating from the Middle East have been the archetype for retailing throughout the world. The operating manuals for today’s sprawling shopping malls and bustling dis-count centers are the same operating manuals accompanying the earliest Eurasian caravans as well as the medieval trade fairs of Europe. Caveat emptor!
Retailing has been elevated to a pseudo science in the Twentieth Century. Shopkeepers are helped and cajoled by hordes of erudite behavioral psychologists, economists and MBAs as well as lawyers and accountants. Retailing has become very sophisticated.
Whether one is managing Jack & Sally’s Variety Store, Home Depot Inc., or Neiman Marcus, the time-tested tools have been well accepted. An abbreviated list of these tools can include "sales," pre-season as well as end-of-season discounts, "this week’s specials," clearances, coupons, "manufacturer’s discounts," member or preference cards, frequent buyer benefits, "buy one -- get one free" and rebates. These tools can be deployed through a host of advertising and other channels of communication as well as through point-of-purchase (POP) promotions -- "sore thumb" displays, end-of-aisle and in-aisle displays, check-out displays, and special discount and clearance racks.
All of these efforts have evolved into an intricate game being played between consumers and merchants -- akin to the haggling characterizing a bazaar in the Middle East. Obviously, in playing this game, merchants are seeking to maximize their profit; many consumers strive to be sufficiently attentive and sharp to realize good bargains. This game is actively in play as numerous customers, armed with discount coupons and weekly promotional circulars, scour the supermarket aisles. This game has apparently been an important part of the shopping experience for the majority of customers, and merchants have responded by adding increasing complexity, innovation and challenge to the rules of the game. Much of this excitement is that the rules can be made to change every day with special displays, sales, discounts and promotions, thereby drawing customers into the store more frequently.
The preeminent master of this retailing game has been the Procter & Gamble Co. (P&G) -- the colossus of consumer goods marketing for over 150 years. P&G has literally written the book on the marketing of consumer goods. P&G has been the outstanding training camp for young women and men seeking careers in consumer goods marketing. P&G sets the cadence by which all of its competitors march. Even its "mistakes" -- e.g., the initial launch of Pringles -- have served as case studies imparting valued information to even its staunchest competitors in the consumer goods industry. P&G’s slightest move is watched and evaluated carefully by every manufacturer and retailer of consumer goods.
Thus, P&G’s recent studies of changes in consumer behavior warrant thoughtful attention. While such a vast market is not changing overnight, it is now clear that more and more consumers are no longer playing the game. More and more consumers do not have time to play the game, and an increasing number of consumers have sufficient disposable income to make the game irrelevant to them. P&G appears to be in the process of re-writing the book.
While women more commonly shop for consumer goods than men, this bias continues to narrow. However, from parking the car in the supermarket lot to returning, the average consumer spends only 21 minutes shopping; the sales tape will record 18 items selected from a total variety of 30,000 to 40,000 items displayed on the shelves. This average consumer finds 25 percent less time to browse than five years ago, and often does not take the time to even check or compare prices. This new average consumer wants clarity and convenience on every shopping visit: the same product in the same location at the same price. Shopping is an unavoidable task akin to putting out the trash; it is not an adventure or even a challenge.
This new average consumer is the product of some seismic demographic shifts. The numbers of two-income families, single-parent households and single-person households are all increasing. Both work and leisure present heightened time demands. While there are significant countervailing trends, there is an increase in aggregate disposable household income. Time will be found to shop for a designer dress or for a new-experiences vacation, but mindless shopping for consumer goods will be done as simply and quickly as possible.
The continued examination of these changes in the new average consumer and the attendant changes in merchandising strategies will be the focus of our next column.
Your comments and suggestions for these pages are most welcome!
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Revised: July 22, 1999 TAF
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