Many so-called business experts predict a bleak future for store-based retailers. In most cases, they cite the incredible pressure exerted by online retailers as the major challenge facing brick-and-mortar stores. While competitive pressure is certainly great, it does appear that some adjustments can be made by retail stores to attract more customers. Some of the changes are discussed in this story from NBC News story. As expected, the adoption of evolving retail technologies is widely considered an essential strategy. For instance, the story reports on how apparel retailers will soon be using body scanners to sell products. These scanners can take a shopper's body measurement and then suggest particular clothing to match the body type.
Another change is a bit more intriguing, at least in terms of retailing history. The story suggests the retail selling space footprint of future stores will be much smaller because the need to carry additional inventory will be greatly reduced. This is because improved shipping methods (maybe even shipping by drone) will enable shoppers to see a product on a shelf, place an order and then quickly obtain their purchase that is shipped to the address they provide.
However, another example of this retail model is also interesting. As noted in the story, a company called Hointer operates apparel stores that have only one version of a clothing product on the retail floor. If a customer wants to try on an item, they use a smartphone app to request the clothing which then appears in a dressing room.
While the limited floor display approach may seem like a new type of retailing format, it is not. Limiting the number of products displayed on a retail floor was a common retail approach used by showroom retailers. Years ago, companies such as Best Products and Service Merchandise operated retail locations where customers could browse a showroom then place an order that could be picked up as they exited. However, by the 1990s the rise of mass discounters, such as Walmart and Target, and category killers, such as Best Buy and Staples, pushed the showroom retail category to the edge of extinction. Whether shoppers will accept a move back to this model is certainly something to watch.
Wow. Here is a quick hit that waited until most marketers left their office for the weekend. According to this New York Times story, one of the world's largest consumer products companies, Procter & Gamble, is making a radical decision to eliminate more than half of its brands. As the story notes, P&G plans to eliminate over 100 low-performing brands while retaining the 80 best performers. As the story notes, the brands P&G will retain represent 85% of the firm's profits and 90% of sales. Which brands are to be pushed out is not identified. However, it appears the firm's leadership is looking to sell off the brands instead of simply discontinuing them.
Obviously this is major news in consumer marketing. A decision of this magnitude is rare. Besides the number of brands affected, the number of employees who will lose their jobs may be significant, though an acquiring company will likely try to keep some workers associated with the brands they purchase.
The move to consolidate is almost certainly a trend we will see continue within many other industries. Certainly, for marketers of leading consumers firms this could be a long weekend since, come Monday morning, they may be summoned to the CEO's office and told to evaluate their company's product portfolio to determine whether product consolidation is something they should also be doing.
Marketers love assigning names to explain segments of the population. For instance, back in the 1970s marketing research firm Claritas (now part of Nielsen) introduced a naming system for identifying lifestyle segments. Called PRIZM, their method created segments using demographic data (e.g., income, age, geographic location, ethnicity, etc.) which was then matched with certain behavioral information (e.g., activities, purchase behavior, political leaning, etc.).
One reason marketers like assigning names to segments is that it makes it very easy to explain their primary target market when talking to non-marketers, including those in their own company. Instead of saying their target market consists of wealthy, suburban living customers between the age of 45 and 64 who are college educated and have children at home, it is much easier to assign a label to this segment by saying their market are the Blue Bloods.
While the approach used by PRIZM and other segmentation models takes into account several variables, another way of classifying groups is more simplistic and considers only a few segmentation dimensions. One of the most popular is based on generational data, specifically on when someone was born. Examples are fairly well known and include Baby Boomers (those born between the mid-1940s and the mid-1960s), Generation X (born between the mid-1960s and the mid-1980s) and Millennials (born between the mid-1980s and early 2000s). These groups are labeled as generational as these are often viewed as being born during the time when the previous generational group has children.
However, it is important to note that creating these demographic categories and names is not set in stone. In fact, the labels and time span become accepted only because these are picked up by mainstream media based on work from a popular writer/researcher who coined the term. So it is with some reservation that we discuss what may be the newest generational label: Generation Z. The Gen Z group represents consumers born after the mid-1990s. According to this story in Shopper Marketing, this group possesses certain traits that set them apart from previous generations with the most notable being that they are the first generation to have always been exposed to the Internet. The impact this group may have on consumer purchasing is discussed in the story.
Over time, it remains to be seen what label is eventually bestowed on this population cohort. What will also be interesting is what name is given to the generation that follows Gen Z since we have reached the end of the generation-naming alphabet.
When marketers chit-chat with non-marketers, the discussion often will touch on what marketers do as part of their regular responsibilities. In most conversations, the marketer will explain they do the activities usually associated with marketing such as advertising, doing research, talking with customers, etc. What is often not included in this discussion is the role marketers play when an organization faces a crisis environment. By "crisis" we are referring to a potentially critical situation that could result in a significant financial and, in some cases, legal predicament for the company. Some examples of situations that may lead to a crisis include: a health or injury issue resulting from using a product sold by the company; a scandal that leads to public mistrust of the organization's top managers; or a violation of governmental rules leading the company to be blamed for causing environmental damage.
In some cases, the public has clearly decided the name of the product or company that is frequently mentioned in news reports is to blame to the point that when the public is exposed to this name they instantly associate this with the damage that was caused. When this happens for an extended period, the company's marketers turn to crisis management marketing. In many cases, their work will eventually bring the brand back to being accepted. However, in other cases, where the damage is beyond repair, marketers may recommend only two options to the top decision makers: 1) get out of business or 2) stay in business but change the product or company name.
For instance, the diet product Ayds enjoyed strong sales in the 1970s and early 1980s until the AIDS disease was discovered. The similar sounding names created significant market confusion that eventually led to the product being withdrawn. Another example is Philip Morris, which changed the overall company name to the Altria Group after facing a long period of negative publicity for it tobacco products. While the company retained the Philip Morris name for its tobacco product line, other company product lines are no longer directly associated with Philip Morris.
We now see another company experiencing a crisis that may lead to a name change. As discussed in this CBS News story, Malaysian Airlines, faced with two dramatic events in the space of a few months, may be looking to rebrand. The airline believes a name change is needed if it wants to move beyond the recent accidents.
It is important to understand that changing a brand name can be quite expensive. Not only because of the new graphics and product labels that are required but also the amount of time and money needed to re-establish a relationship with customers. Additionally, whatever brand equity that still exists with the original name will be lost. So companies will only go this route if they view it as the last chance to remain in business.
Adjusting to market changes is one of the most challenging tasks facing marketers. In particular, deciding whether customers are truly adopting a new trend for the long haul or just experimenting with a temporary fad can make for long meetings among company personnel. Why? Because depending on the trend the change may be so significant a company, and possibly an industry, may not survive.
For instance, in the early 1900s, buggy whip marketers disappeared when automobiles became the principle method of transportation. More recently, video rental retailers, that first offered VHS tape products and DVDs, were pushed out by cable television and online video. And, of course, there are many, many other examples.
So it is with great interest that we see what could be another product category destined for retirement. According to this Advertising Age story, the traditional businessperson briefcase may be on the way out. Its replacement could be the backpack or some form of over-the-shoulder carrier. The reason for this appears to lay with consumers' need to access mobile devices as they are walking or otherwise traveling. That is, most people cannot easily carry a briefcase while also texting, talking on their mobile phone or web surfing.
This trend must be causing deep concern among briefcase marketers. They must be struggling to decide whether to continue to spend on marketing traditional briefcases or shift their focus to over-the-shoulder models. The stakes in making the right decision and doing it in a timely manner may be the difference between staying in business or looking for a new job.