Tuesday, June 14, 2011 | Edited by Daniel Moores
||Retailers Respond as Value Mania Hits Even the Well-to-Do
They make more than $100,000 a year. They're recently back from a vacation to Aruba -- via freebie air miles. And they go shopping together for their groceries every week --at Walmart.
The Whited family of Marietta, Ga., never expected that Walmart would become their shopping anchor. Or that value would become their shopping mantra. But they have little choice.
While their total income far exceeds what most American families make, in a post-recession nation still adapting to higher food and gasoline prices and a still-shaky employment picture, their ultra-value-conscious shopping habits square perfectly with millions of other American families who can't let go of the tough lessons learned from the Great Recession. America's largest and most familiar retailers -- from Walmart to Target to 7-Eleven -- have been forced to bend to this new reality.
"We used to shop wherever we wanted and throw whatever we wanted into the basket," says Jamie Whited, who is a mother of two young boys and vice president of client services at a software marketing company. "Now we're very conscious of where we shop and what we buy there."
But like a growing number of Americans, the Whiteds don't measure value only by price. They examine how much is actually in a container. They factor in family preferences. And they still demand the kind of quality they used to get in pricier products. This new American shopper is changing the way retailers market, merchandise and maneuver.
"It's a new game, with America's retailers and manufacturers trying to satisfy consumers on multiple levels," says James Russo, vice president of global consumer insights at Nielsen. "There's a fundamental shift in consumer behavior, and retailers have had to adapt."
Nearly 45% of consumers say they have become "more practical and realistic in purchases," according to a May consumer survey by BIGresearch. That's up from 43% May 2010 and up from 37% five years ago.
Few things are more practical than the use of coupons. Before the recession, 22% of households reported using them. During the recession, the figure ballooned to 35%. But now, even with the recession supposedly in the rearview mirror, an even higher 37% of consumers say they use them, Nielsen reports.
Nor is it just lower- or middle-income consumers who clip coupons, but higher-income shoppers, too, Russo says. "The stigma is gone."
Before Whited goes shopping, she and her 6-year-old son, Austin, clip coupons. When they snatch something from the shelf, Austin's typically the first to ask if they have a coupon for it. Besides coupons, Whited recently started to take along a calculator that she uses to make sure they don't go over budget.
About a year ago, they switched from grocery shopping at Publix to Walmart. More recently, they even switched which Walmart store they shop at because they discovered that one slightly farther away typically offers better deals.
It's not as if they have to make these changes. Whited and her husband, Michael, both kept their jobs during the recession. But Michael, who is a call center manager, hasn't had a raise in two years. And while Jamie recently got a small raise, it's less than $50 per paycheck.
"We were sitting there at the end of the month with no money left over," she says. "We couldn't figure out why."
Walmart brings back the basics
Duncan MacNaughton, chief merchandizing officer at Walmart, says the chain is totally plugged into the economic squeeze affecting the Whiteds and millions of other American families. "Our customer continues to be under significant pressure," he says. "Our job as a merchant is to delay and mitigate that pressure as much as possible."
That's one reason the chain has refocused -- like a laser -- on value. Walmart recently pulled away from trying to be fashionable. It nixed eye-pleasing wider aisles while cramming bargains galore back into the store by adding 8,500 items -- nearly 11% more merchandise, MacNaughton says.
Walmart brought back everything from cut fabrics to camping equipment to guns. "Our customers are telling us they want basics," says MacNaughton.
But even with the basics, they demand value -- and decent quality. In November, the Whiteds decided to start economizing by substituting store-brand and value products for name brands. Now, instead of paying up to $4.99 for a bottle of Pantene Pro V shampoo, they're buying Suave Professional for $1.99. "That's a significant difference for us," Whited says.
And earlier this year, Michael Whited stopped buying the Kellogg's Frosted Mini-Wheats that he loves and substituted a value brand sold at Walmart: Malt-O-Meal's Frosted Mini Spooners, which provides nearly twice as much cereal for about the same price.
"We definitely prefer quality," says Jamie Whited. "But if we can get quality at a cheaper price, we'll go for that."
Walmart has plenty of company among retailers hammering the value message. But one is a surprise: 7-Eleven.
Convenience chain gets value message
The chain most folks go to for convenience is starting to tout value.
In 1998, 7-Eleven created the 7-Select store brand. That line, which started with a handful of products, now tops 300 -- with more coming, says Jesus Delgado, 7-Eleven's senior vice president of merchandising.
"Since the recession, consumers have been asking us for more value, and we've had to respond," he says.
For example, a 2½-ounce bag of Lay's potato chips sells for 99 cents to $1.29 at 7-Eleven stores. But the chain's 7-Select brand in a 2½-ounce bag consistently sells for 89 cents.
Nor is 7-Eleven limiting its value play to its own brands.
John Lindstrom knows firsthand. The 22-year-old senior at Purdue University is spending the summer in his hometown of Dallas. After shooting hoops in the heat with some buddies, he recently stopped by a 7-Eleven near Southern Methodist University.
He headed straight for the display that offered two 20-ounce Gatorades for $2. "It was a no-brainer," he says. "One bottle usually goes for $1.79."
These days, he says, he even searches out value at 7-Eleven.
"The hangover from the recession forces people like me to look for values in places they previously didn't," he says.
Value sits at the top of his shopping list. While at college, he buys groceries only at Walmart and mostly sticks to generic and store-brand products.
"I stay away from places that don't have deals," he says.
Retailers all recognize the new mindset. Here's how four others are responding:
• Target. Although rival Walmart has long worn the value crown, Target is picking away at that by rolling out value brands for food and household products.
Its Market Pantry store-brand food line -- with prices 10% to 30% off national brands -- has ballooned to 1,800 items since it began in 2001. Over the past year alone, it's added more than 100 products, says Annette Miller, vice president of grocery at Target. The Market Pantry line's strongest growth has been since the recession, she says.
More recently, in 2009, Target created the Up & Up line of home products, such as paper products and health and beauty aids. That line, which offers savings up to 30% over national brands, already has more than 900 items, she says.
• Domino's. Just how low can the price of a large pizza go?
Domino's is pushing the envelope. It's busting through the now-familiar $10 pizza deals with a Monday through Wednesday offering of $7.99 for carryout pizzas. It's the first carryout promo the chain's ever offered. And it includes up to three toppings -- which adds serious luster to the value aura.
"People had enough of a shock in 2008 that they're being smarter about how they spend money in 2011," says J. Patrick Doyle, CEO at Domino's.
Some families buy two and toss one in the fridge for the next day, he says. "Consumers are absolutely as focused on value today as they were during the depths of the recession," he says.
• Jos. A. Bank Clothiers. Nothing brings customers into the men's clothing chain faster than promotions on suits.
Last Thursday, Jos. A. Bank had a doozy. For the first time in its 106-year history, the 500-store chain not only put its entire stock of suits on sale at half price, but also threw in a free suit with each one purchased. In other words, for $275, folks walked off with two suits.
Psychologically, says Jerry DeBoer, senior vice president of marketing, the bragging rights have serious heft.
"You're not just bragging about a cup of coffee that you got cheaper," he says. "You're bragging that you saved hundreds of dollars on a suit."
• Seattle's Best. Then, again, maybe there are bragging rights for a value-based cup of coffee.
That's the guiding light at Seattle's Best Coffee, the value brand owned by Starbucks that is growing at a double-digit pace. A bag of Seattle's Best coffee at the grocery store typically costs as much as $2 less than its big sister Starbucks brand.
The brand's entire strategy is quality for the masses. Eighteen months ago it was sold in just 3,000 locations, but the brand is now sold in upwards of 50,000 locations, including Burger King, Subway and AMC Theaters.
"People are not going to settle and choke down a bad cup of coffee because it's cheaper," says Michelle Gass, president at Seattle's Best. "The value of coffee isn't just in its price. A cup of coffee can be the best -- or worst -- part of your day."
(Source: USA Today, 06/10/11)
||Billion-Dollar Boys' Club
Restaurants That Woo Men with Attractive Waitresses, Big Beer Selections & Giant TVs are Winning Loyal Customers -- and Raking in Revenues
Franchises inspired by the Hooters model -- such as Celtic-themed sports bar chain Tilted Kilt Pub & Eatery and faux mountain sports lodge chain Twin Peaks -- have expanded rapidly over the last half decade, while corporate-owned chains like Brick House Tavern + Tap and Bone Daddy's House of Smoke are picking up steam regionally.
In fact, for the next couple of years, this segment (often referred to as "breastaurants") is poised to be one of the fastest-growing restaurant categories.
Sales figures for this specific niche aren't available, because they are lumped in with the broader casual dining segment -- and numbers for the privately held companies aren't publicly reported -- but sales at Hooters alone have increased in the last couple of years and average $1 billion annually.
The concept has grown in spite of the recession by focusing equally on upscale comfort food, full bars with extended beer choices, a full menu of sports on TV, and waitresses in tight shirts and short shorts. But the most important aspect of these restaurants is the same element that powers most successful eateries: customer service.
Why is this segment so popular? "It starts with comfort," says Darren Tristano, executive vice president of Technomic, a food-industry consulting firm in Chicago. "These concepts are growing by offering a different level of service and attentiveness.
"They provide a service to men who may not have a person at home to take care of them in the same way. That's important to a number of people, and it drives them back."
It's hard to say exactly why these public man caves took hold in the last few years. Some think a shift away from political correctness or toward a more sexualized culture made the concepts more acceptable. Others believe that as Hooters sales flattened and expansion stalled, like-minded entrepreneurs saw a niche that wasn't being filled.
Ron Lynch, CEO of Tempe, Ariz.-based Tilted Kilt, thinks his concept has been well-received because customers were ready for something new.
"Friday's, Chili's -- those kinds of concepts came to be very similar in menu and look because they were chasing the same dollars," Lynch says. "When we sprang up, people were looking for something different."
That's what attracted Lynch to Tilted Kilt in the first place. In 2003, Harrah's in Las Vegas asked restaurateur Mark DiMartino if he had a concept for a space in the Rio Casino. He came up with the Hooters-goes-to-Scotland concept that is still the restaurant's theme. When Lynch -- an area developer for Schlotsky's Deli -- saw the place in 2005, he was hooked, and approached DiMartino about buying the franchise rights. By 2006, there were three Tilted Kilt franchises in the system. The concept has doubled each year. Lynch estimates Tilted Kilt will have 80 units open by the end of 2011, with another 70 deals for new spots in the pipeline.
There's a lot more going on at the Kilt than just men watching women, Lynch says, pointing out that one of the company's key offerings is "sports-viewing excellence," which translates to 50-inch plasma TVs throughout the restaurant, a full bar with a minimum of 24 beers on tap and a menu that ranges from inexpensive snacks to $19 steaks.
But he acknowledges that the cornerstone of the restaurant is the Tilted Kilt waitress. "We make no bones about it -- that's what brings people in," he says. "We sell on sex appeal, but we are sexy classy, sexy smart or sexy cute. Not sexy stupid or sexy trashy."
Randy DeWitt had the same idea back in 2004. After growing his Rockfish Seafood Grill franchise too quickly in the Dallas area, he was faced with having to shut down stores. But instead of writing the locations off, he drilled down into the data and realized that while casual dining was tapering off, Hooters and similar concepts were doing well.
That's when he came up with Twin Peaks, a franchise based on a mountain lodge theme, where the girls wear plaid tops, suspenders and hiking boots.
"I knew guys like me would like a man cave where the waitresses are pretty and friendly, and we thought we could create a concept sufficiently differentiated from Hooters," DeWitt says. "I thought Hooters had taken the low-brow route, and we're taking the high road. We have higher-quality food, and the uniforms on our girls are more finished. Hooters is more blue collar. We do well where Hooters isn't accepted."
DeWitt's experiment worked, and he soon began converting more of his seafood restaurants into mountain lodges. Now Twin Peaks has 14 locations, with two under construction and five more in development.
What makes the restaurant stand out, besides the waitresses, DeWitt says, is its commitment to quality. All mugs are frozen, and a special draught system ensures that every beer pours at 29 degrees. They have a full line of top-shelf whiskey, and their skilled bartenders know their booze. The food is all fresh -- even fryer items like mozzarella sticks, which are hand-cut, breaded and cooked to order.
But as restaurant consultant Tristano indicates, the true differentiating factor of the modern "breastaurant" is service. Most customers aren't satisfied with brusque service -- they want a conscientious server and a meaningful connection.
"Everybody else is rushing toward technology with kiosks that you order off of and servers who slip food to you around the corner. We're going the other way," Lynch says. "One of our mantras during training is that we want to make a connection with our guests. We practice 'touchology,' which means touch the table often, and make guests feel at home. Sometimes waitresses are providing the best part of a guest's day."
Twin Peaks' DeWitt agrees that fostering connections is the key to a restaurant's success, especially when it breeds repeat customers. In fact, some waitresses become mini-entrepreneurs on their own, using Facebook or Twitter to let regulars know what shifts they'll be working or what specials the restaurant is offering.
"When we see regulars walk in the door for lunch, the hostesses and waitstaff greet the guy by name," DeWitt says. Regular customers often ask for certain employees to wait on them, he says, and waitresses are instructed in how to connect with guests.
"We have a certain language and we train that among our waitstaff," DeWitt says. "If you ask for a beer, the waitress will ask 'Do you want the man size or the girl size?'"
Tristano confirms that the servers drive the concepts. "The increased service is absolutely the core, not the food," he says. "I suspect a lot of this segment's success has to do with server training and hiring the right people."
Though this segment of the market is definitely heating up, none of the concepts thinks they are in danger of saturation, especially since their numbers are fairly small and they're not targeting the same geographical areas. Instead, they worry about competition from sports-oriented concepts like Buffalo Wild Wings. In fact, DeWitt says today's market is similar to the one from which Hooters emerged in 1983.
"It seems like Hooters had the whole segment to itself back then, but if you do the research, they had a raft of competitors that popped up -- often with really crass names like Mugs 'N Jugs -- before Hooters emerged as a clear national leader," he says.
DeWitt is wagering that most of his competitors in the male-bastion market will try to grow too fast and flame out at the regional level.
"Every concept wants to grow and be nationwide, but you have to lay in the infrastructure for growth before going into build-out," he says. "You have to bring in highly talented operators that can manage rapid growth. We're not trying to grow faster than we're capable."
The concept is still evolving. Brick House Tavern + Tap -- owned by Ignite Restaurant Group, the company behind Joe's Crab Shack -- touts itself as the ultimate man cave, with more than 70 beers, alcoves filled with theater-style seats outfitted with trays where customers can watch the game with friends, and special 100-ounce beer bongs with their own taps. So far, the concept has opened in seven states.
As innovative as they might be, can these concepts survive if they cater only to half the population (and the one that doesn't always choose where to dine)?
"I think these concepts have to target women to be successful," Tristano says. "One third of their customer base is female, and they have to make an effort to make women feel comfortable."
Lynch thinks Tilted Kilt, at least, is succeeding with the female demographic. "I characterize ourselves as very PG-13," he says. "When a guy empties his pockets on the dresser and his wife sees a Tilted Kilt receipt, it's going to be fine. I was surprised when franchisees started asking for high chairs. We are no threat to women, and we train our servers to make a connection with women at the table first."
Although the women may be on board, there's no question that these concepts cater first and foremost to manly appetites.
"Why do regular customers come in three times or more a month?" DeWitt asks. "What more could a guy ask for: great food, sports, beer and a cute girl to look at. We don't go real deep."
(Source: Entrepreneur, 05/24/11)
||Summer Vacation or Bust
Like the Griswolds, Americans are ready to hit the road for their summer vacation.
More people are choosing to travel this summer after years of staying home, according to recent reports. In an American Express survey, 59% of Americans said they are planning a trip this summer, up from 51% in 2010.
But because most consumers feel particularly cash-strapped as the recovery sputters, this year's summer vacation is more in line with "Walley World" than European Vacation.
"Americans are planning more vacations this summer," said Claire Bennett, senior vice president and general manager of American Express Travel. "However, they are still looking for options with great value."
Most people say they will stay relatively close to home and opt for a destination within driving distance. In fact, automotive group AAA estimated that 88% of the 34.9 million Americans that traveled over Memorial Day weekend, traveled by car.
Only about 20% of Americans plan to fly to domestic destinations this summer and just 14% will head overseas (thanks to the steep cost of international travel), according to a separate report by MasterCard.
Driving nearly 1,000 miles from Indianapolis to Disney World in their Toyota Sienna was all Angela Barnes' budget would allow. The 33-year old marketing consultant hadn't taken a vacation with her husband and two young children in years, but "we made it a priority this year that we were going to go away," she said.
In order to stay within their means, Barnes sought out deals online and scored a two-bedroom villa in Orlando for just $99 a night, a 50% discount she negotiated through Sheraton by forgoing maid service during their three-night stay.
The Barnes family also opted stay with family in Atlanta along the way in lieu of a hotel.
"With a little leg-work, the total, including gas, hotel, food and extras -- like a massage for me -- for our family of four was $1,200," she said.
And worth every penny, Barnes noted. "It made me realize we need to do this more often."
Overall, vacationers plan to take an average of two weeks for a trip, and spend an average of $1,200 a person, or a few weekend-getaways, spending just $300, Amex said.
Suba Jagan is also planning a few frugal trips. She and her husband will camp this summer in the national parks, like Sequoia, near their home in Southern California.
"This way we can save money, get away from technology for the weekend and unwind," Jagan said, even though it's a far cry from the trips to Hawaii and New York that they used to take in better economic days.
According to CampingWorld.com, one of the largest online retailers of camping equipment, sales are already up 9% compared to the start of last summer.
"We did the calculation and figured we can take eight such trips for the cost of just one week-long vacation that includes airfare," Jagan said.
Total cost for a weekend of camping is just $300 for the two of them -- including marshmallows, she said.
(Source: CNNMoney.com, 06/10/11)
Daily Sales Tip: Setting Goals
Rainmakers, those in the top 10% of all sales performers, believe in the power of goals and action plans. Those who truly want to reach the elite status don't get there by accident -- they live by goals, and they are committed to doing what they need to do to achieve.
There are two important things that set apart sales people, sales managers, and leaders who live by their goals and those who don't.
First, people who have goals know where they want to go. Contrary to what you might read in other books about goal setting, you don't have to sort out your life's purpose in order to achieve success in sales.
All you need to do is set a target. It can be as simple as having an annual revenue goal, and having the answer to the question, "Do I really want to achieve this badly?"
Second, once you know where you want to go, commit to a goals routine. If you have already done so, bully for you! It'll help you achieve. In any case, take care to keep your goals routine simple, and to visit it frequently.
The simpler it is, the easier it is to stick with it. A simple roadmap can help you build and stick to your own goals routine. Below is one that is easy to follow in your journey to sales success:
-- Review your goals first thing in the morning every day. Say your big picture goal out loud, then review your action plan for the day. This should only take a few minutes. At the end of each day, review how the day went, and set goals and actions for the next day.
In the time you might take to drink a cup of coffee (if you down it as fast as I do), you will have accomplished this review.
-- On Friday, or during the weekend, review the week and set goals and actions for the next week.
Do this with a colleague who can be a "goals partner" so to speak. Your goals partner can be a peer, a mentor, a coach, or a friend, but it's someone you work with explicitly each week to make sure you're on top of your goals, staying committed and pushing yourself.
-- Once per month, meet with a small group of people you trust to review what you're doing, where you're headed, what you'll do in the next month, and get ideas for how you can achieve more and shake off any nagging hassles.
-- Once per quarter, review your progress toward your annual goal. During this meeting step back and ask yourself, "What do I absolutely positively need to get done over the next three months to achieve my annual goals?"
Set no more than three priorities for the next quarter that you'll direct all your passion, energy, and intensity toward so you can stay on track.
-- Once per year, set your targets for the next year. Make sure you ask yourself, "What do I need to do to get to my big picture goal?"
When you're done with your goals and annual plan, ask yourself, "If I get done what I'm about to do, will it help me get to my big-picture goal?" Make sure it does!
Source: Sales consultants Mike Schultz and John Doerr of the RAIN Group