Thursday, November 29, 2012 | Edited by Daniel Moores
||Shopping's Great Age Divide
Younger Generations Approach Holidays With Smartphone Tactics; Mom and Dad Clip Coupons
The Ultican family has always approached Christmas shopping on overdrive, piling dozens of presents under a small forest of decorated trees. But the Ulticans and their four children wrangle the annual extravaganza in different ways, underscoring the challenge facing retailers as technological changes transform Americans' buying rituals.
During a recent holiday shopping trip, Chris Ultican, a 54-year-old teacher, and her husband Kreg, a 56-year-old retired high-school administrator, happily wandered the suburban Easton Town Center mall in Columbus, Ohio, sipping caramel frappuccinos and admiring the festive horse-drawn carriages.
Mr. and Mrs. Ultican, who met as sales clerks at J.C. Penney Co. 35 years ago, say they are shopping more online these days, but they have yet to make a major purchase on their cellphones. For the mall, they came armed with clipped-out paper coupons.
Their children are a different matter. Ranging from age 10 to 27, the offspring mostly ignore the holiday décor, and instead peer into their smartphones, comparing prices, looking for deals and seeking friends' advice about potential purchases.
Daughter Danielle, 24, who works at a payroll company, is accustomed to receiving pitches through social media and email, so much so, she said, that it takes something special -- like a call to her cellphone from a saleswoman -- to grab her attention. "A personalized call usually gets me in the store," she said.
Despite a lot of looking, Danielle left the mall without spending any money. When she got home, though, she went online and bought herself a red lace dress she had seen earlier in the day at J. Crew Group Inc.'s Madewell. That is not surprising; about 70% of people age 18 to 34 plan to "self gift" this year, compared with 44% of people over age 65, the National Retail Federation said.
Little sister Drew, 10, uses her rhinestone-encased iPhone to post photos of potential purchases as she shops, while polling her friends with an Instagram app to get opinions on which clothes to wear to school the next day.
Retail chains are struggling with how to respond to families like the Ulticans, hoping to capture the attention of the so-called Millennial generation, ages 16 to 34, but fearful that moving too fast will alienate baby boomers.
The 79 million people who make up the Millennial generation wield $200 billion in annual spending power. While that is only a sliver of the $3.4 trillion that baby boomers spend each year, analysts say, retailers need to try to nab those younger shoppers now, because their spending is likely to rival the boomers' as early as 2020 and they already exert a disproportionate influence on their parents' spending decisions.
Moreover, during the holidays, shoppers age 25 to 44 plan to spend the most of any age group, about $820, according to the NRF. But shoppers aged 45 to 64 are also heavy spenders, planning to spend about $760.
At Macy's, Mrs. Ultican dug through her purse for a 20% off coupon to buy a pair of boots. Although she couldn't find the coupon, she successfully persuaded the saleswoman to give her the discount anyway. The boots joined two shopping bags of loot from Justice, a tween apparel chain owned by Ascena Retail Group Inc. The bags were crammed with jeans, sweaters and a $75 sparkly blue makeup case Mrs. Ultican bought using a 50%-off coupon.
Her son Derek, a 26-year-old Ohio State student, who is also a loyal Macy's customer, told his mom he prefers to shop online and search for coupon codes rather than keep track of offers in the mail. He didn't buy anything at the mall but picked out a Timex watch at Nordstrom for Santa to bring. He said he plans to do his holiday shopping on macys.com.
Derek's brother Dustin, 27, also would rather be anywhere but a physical store. The real-estate agent says he shops "only when I need something," and favors discounters like Target Corp. He focuses his spending on big, important items, like his new, white Audi and left the mall empty-handed.
Retailers including Wal-Mart Stores Inc. and Best Buy Co. are trying to target younger consumers this holiday season by offering some of their in-store deals online, while others such as Macy's and Sears Holdings Inc. are launching new brands and websites that cater to a younger generation.
Technology plays an increasing role in the generational shopping split. Millennials are two-and-a-half times more likely to be early adopters of technology than older generations, serving as a leading indicator for retailers of what is likely to become mainstream, said Christine Barton, a partner at Boston Consulting Group. Millennials are more likely than older shoppers to check out brands on social networks (53% versus 37%) and use mobile devices to read reviews, research products and compare prices while shopping (50% versus 21%), according to a recent BCG/Barkley report.
Macy's, which created a separate Millennial division this year, has sectioned off parts of its department stores to house Impulse and MStyle Lab, boutique-like spaces with bright signage and pop music to attract shoppers ages 13 to 30.
"To get them into our stores we're going to have to do things differently," said Molly Langenstein, Macy's millennial merchandise chief.
Retailers can run the risk of taking the quest for youth too far. In an attempt to overhaul its century-old store in search for younger customers, J.C. Penney has remodeled stores, altered its merchandise mix, changed its logo and, most of all, is eschewing special discounts in favor of overall lower prices. But so far the plan has largely backfired: Penney's sales fell 27% in the three months ended Oct. 27, in a fourth consecutive quarterly drop.
"Younger shoppers don't want to go to stores where their mothers shop and older shoppers are just confused," NPD Group strategist Marshal Cohen said.
Customers may be hesitant about the changes at the retailing chain, said Penney spokeswoman Daphne Avila, but over time they will find "a unique store experience that can be enjoyed at any age."
Impressions are hard to change, though. While Mrs. Ultican says she was raised going to Penney, where "you never buy things full price," her daughter Drew refers to Penney as a place "for old people."
Meanwhile, with her phone Drew points her mother to Christmas gifts, highlighting the best deals on things including Amazon.com's latest tablet.
"This year she wants a Kindle for Christmas," Mrs. Ultican said of Drew. "I'm not really even sure what that does."
(Source: The Wall Street Journal, 11/27/12)
||The Fifth Meal
The breakfast and post-dinner dayparts have proved to be successful business extensions for many fast casual and quick service restaurants the last few years.
Now, some operators are testing another daypart: brunch.
Florida-based fast casual Salsa Fiesta added a brunch offering to its fresh, made-to-order Mexican menu to open the door for additional weekend sales. The brunch menu, served from 10 a.m. to 1 p.m. on weekends, includes items like an enchilada omelet, gluten-free waffles, huevos rancheros, and "hangover tortilla soup," complete with a fried egg on top.
"It's something a little different and unique," says owner and cofounder Cesar Olivo. "In South Florida, there's nobody doing a brunch menu."
So far, the brunch addition has been a big success at the concept's two stores. Olivo says weekend sales are up about 5 percent since adding brunch three months ago, and sales continue to climb each Saturday and Sunday.
The new menu is playing well with Salsa Fiesta's regulars, as well as pulling in new customers and families who enjoy a post-church brunch on Sundays.
"It's an experience for the whole family," Olivo says. "For that time, they have the possibility of enjoying and sharing a little bit with their family members."
Consumer demand for breakfast and brunch is a key driver for First Watch, a multistate chain of 103 restaurants. First Watch stores are open from 7 a.m. to 2:30 p.m. daily and always offer a menu with breakfast, brunch, and lunch options. Breakfast is king, accounting for about 50 percent of weekday dining. Restaurants also do about half of their business on Saturday and Sunday.
First Watch has filled a unique niche, says CMO Chris Tomasso. Its menu offers something for everyone, with heavy traditional breakfast and brunch items alongside several lighter dishes. That, along with the overall growth in the morning daypart and the rise of the value-minded consumer, has given the brand a distinct positioning, he says.
Tomasso says the brunch market is getting more crowded. But for now, First Watch sees chef-driven neighborhood restaurants as its biggest competition -- not quick-service or fast-casual chains.
"We have seen more and more restaurants start offering brunch," he says. "Basically, what they're trying to do is utilize their physical space during more hours, and brunch or late-night seem to be the two areas they're focusing on. And I think there will be more restaurants that continue to open for that daypart."
But while breakfast has become an increasingly popular offering at quick-service and fast-casual restaurants, not everyone is convinced brunch will be as successful.
"I think brunch becomes a difficult occasion for (quick-service) operators to effectively address because this is typically a sit-down event for consumers," says Maeve Webster, director of food industry market research firm Datassential. "It's almost exclusively a weekend event, which wouldn't be very effective for a (quick serve) to offer. As a result, we see (operators) going the more traditional breakfast daypart route and offering it throughout the week."
Webster says the penetration of fast feeders offering breakfast has risen steadily since 2006, while the growth of brunch menu items hasn't moved at all in the segment.
Salsa Fiesta leaders noted some difficulties when first adding brunch items.
"At the beginning, it was a little challenging because all our line cooks and everybody needed to adapt to a completely new menu," Olivo says. "But after a while -- three or four weeks -- they felt more comfortable."
So comfortable, in fact, that owners are now considering adding a weekday breakfast menu aimed at drumming up more sales with the business crowd.
Tomasso says established operators will face a range of other challenges when looking to add a new daypart like brunch. Chief among them, he says, is that brands will have to build recognition of the new daypart among their consumer base.
"It's a brand thing and trying to get your customers to look at you as something other than (how) they've known you," Tomasso says. "Sometimes a consumer has a hard time comprehending that and understanding that. It takes a while for that offering to take hold."
But Tomasso views the growing battle over breakfast and brunch dollars as good for business.
"If the awareness of breakfast and other concepts coming into it gets more people thinking about (the morning daypart) and going out for breakfast, that will also help us," he says.
(Source: QSR Magazine, 11/26/12)
||Deck the Halls: Gifts Go 'Home' for the Holidays
The concept of being home for the holidays may be taking on new meaning for shoppers, who have been increasingly turning their attention to the home and shopping for more practical gifts this holiday season.
In its latest holiday forecast, International Business Machines predicts shoppers will be decking the halls this holiday season, leading to a jump of nearly 7 percent in home furnishings sales during November and December.
IBM uses analytics software to help make forecasts. The software looks at recent trends as well as 22 years of sales and economic data.
"Over the past 10 months, we've seen an estimated growth of nearly 9 percent for the home category," said Jill Puleri, global retail leader for IBM Global Business Services.
This is a trend that can help department stores such as Macy's and Nordstrom's as well as more dedicated home goods players such as Bed Bath and Beyond and Williams-Sonoma, the operator of stores such as Pottery Barn and West Elm.
Puleri attributes the boom in the category to the increase in the number of multigenerational homes brought on by the economic downturn. But earlier this year, IBM also released research that tracked a correlation between the Year of the Dragon in the Chinese lunar calendar and home furnishing booms.
Still, it is likely that as generations move in together, the situation triggers the need for new furniture, decor and items such as linens and pillows, as families rearrange their home to reflect the new residents.
According to a recent U.S. census report, multigenerational homes have increased by more than 1.2 million over the past few years. The Pew Research Center estimates 41 percent of adults between the ages of 25 and 29 are living, or have in recent years lived, with their parents.
"The home is becoming more than a place to live, but now it's a place to gather and entertain -- it's being re-established," Puleri said.
According to Puleri, consumers are still talking about moderation in how they spend money, and that means that spending tends to shift from category to category. Earlier in the year, for example, there was a boom in men's apparel. Then, around the time the kids headed back to school, women's apparel sales ticked upward.
Now, Puleri expects spending to shift from clothing to other categories. As a result, the IBM survey calls for apparel sales to rise 2.5 percent during the holiday season, with women's clothing sales up 2.9 percent.
The beauty category also is expected to show strong growth during the holidays, with sales up 7.8 percent. Sales in this category have been strong throughout the year, according to Puleri. For the full year, beauty products sales are expected to be up 10.8 percent.
"Beauty has had a very good run," she said, citing an aging population as one factor behind the growth.
Also, with shoppers in a more conservative mood, the focus will likely be on more practical gifts this year, Puleri said.
"I think this is a 'needs' holiday," she said. "People want to give things that are meaningful...People want the gift they buy to be something that really does matter."
(Source: CNBC, 11/09/12)
Daily Sales Tip: Honesty is the Best Policy
Successful salespeople all use a range of different styles and techniques, but they also all share one key thing in common: they know that honest communication is the single most important secret to increasing sales, and commissions.
By focusing their efforts on creating a positive customer experience based on openness and trust, these top performers can almost always rely on an extraordinary level of repeat sales. Nine times out of ten, their customers would simply never even think of looking elsewhere when they need to reorder. As we all know, it's far easier -- and far more profitable -- to keep repeat business, than it is to land a whole new account.
So what's the "secret" to establishing and maintaining credibility in the eyes of your clients?
Don't lie. Ever. End of story.
Lies not only damage the ability of salespeople to communicate with their clients. They can also result in a complete communication breakdown that is difficult -- or even impossible -- to repair.
Source: Colleen Francis, founder and president of Engage Selling Solutions