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For Retailers, The Struggle Continues

Two years ago I wrote about the struggle of retailers. At that time the big story was Target’s retreat from Canada. The chain closed 133 stores, laid-off 17,600 employees and absorbed US$2-billion in losses. That figure did not include the $7 billion the company invested to enter the market.

Target dominated the headlines but at the same time in Canada Sony closed all 14 of its stores, Mexx 95, Smart Set 107, and Jacob 92. In North America, Staples shuttered 225 stores, Office Depot 500, Radio Shack 200, Abercrombie & Fitch 180, Aeropostale 250, JC Penny 39, Wet Seal 338 and Coach 70.

Are they missed? Not really and the numbers and types of stores shedding physical locations continues to grow. Credit consulting firm F&D Reports that in the U.S. 3,600 stores have closed since January. That is about 20 a day. The firm expects the number will reach 10,000 by the end of the year. Vulnerable brands include Neiman Marcus, Sears (no surprise), Claire’s, and J. Crew.

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Choice & Clutter

The average American supermarket now carries 48,750 items, according to the Food Marketing Institute, more than five times the number in 1975. Britain’s Tesco stocks 91 different shampoos, 93 varieties of toothpaste and 115 of household cleaner.

In addition to the range of choice in even the most basic brand categories, consumers receive over 5,000 media messages a day containing over 100,564 words. So in my opinion, the most important metric in the next ten years will be how many messages consumers choose NOT to see on a daily basis.

We are creating consumers with such thick skins and blinders that messages bounce off them – we are training them to ignore and disengage which is exactly the opposite of our objective.

In response to choice, many brand owners are now taking steps to rationalize their brand portfolios to simplify and reduce cannibalization. According to Sheena Iyengar in “The Art of Choosing”, Procter & Gamble thinned its range of Head & Shoulders shampoos from 26 to 15, and sales increased by 10%.

Regarding communications clutter, Canadian Marshall McLuhan presciently stated in the 1960’s, “One of the effects of living with electric information is that we live habitually in a state of information overload. There’s always more than you can cope with.”

In the next ten years, we will see cycles of brand proliferation and rationalization with corresponding communication cycles. So the brands that simplify people’s lives and speak honestly will stand a better chance of success than those who do not credit the growing power of the consumer, the stresses they are encountering, and how that will impact their choices.

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