Irrationality: we got it, but can you capitalize on it?

William Cusick, who runs VOX, a customer experience consulting firm, has gained some notoriety for proclaiming that "All customers are irrational" (appropriately used as the title of his forthcoming book) but that marketers can still use behavioral psychology to strategize sales and profitability. Irrational, to Cusick, is mitigated by encouraging consumer loyalty at every step of the branding process.

Cusick does a great job of pointing out all the ridiculous ways that corporations organize their promotions and sales to attract new customers while ignoring the better revenue possibilities that come from more attention to your current clients. Just think of your mobile phone service contract or your internet service and you get the idea: While Cusick emphasizes findings from brain research (which feels like overcompensation -- to dress up good insights with the unassailable imprint of Science) – his real skill is at breaking down the sales experience from the consumer’s perspective and mirroring that back at retailers. I particularly like Cusick’s Twelve Steps to Improve Customer Experience, which, as he points out, are incredibly easy to implement and rely on rather inexpensive methods (such as qualitative observation, adding more trained personnel rather than technology, and mapping customer experiences).

For those who work in digital point-of-sale technology, one key take-away point is that such innovations should not be promoted as replacement for workers, but rather that employees still need to be the primary interface with customers, acting as a guide to both the services and the self-service kiosk. It’s a reminder that technology is a tool to help both sides of the retail aisle. For a great example, look at how Stop and Shop’s excursion into hand-held scanners is facilitated by employees at the entrance, throughout the store, and at the checkout. Eventually, after repeated use, customers will get used to "paying" for their items as they put them in the bag. But for now, they need a lot of hand holding -- and some of that attention never goes away. Even as shoppers more readily cue up at self service supermarket checkouts, the smarter stores continue to have enough personnel deployed near registers to help, look things up, and solve the problem even before the blinking light above can signal real distress!

Checking in on the Gap: Old Navy Riding the Waves

Not surprisingly, the Gap reports drops in retail sales over this last quarter. While the company and its three stores – Old Navy, Banana Republic, and the Gap – have been struggling to return to earlier gangbuster popularity. Expansion, rapid merchandise turnover, and shifts to the brand identities were not sorted out and established strongly before the recession really started to take a bite out of everyone’s clothing budget.

In the past I’ve singled out Old Navy as an example of a concept gone awry, a good idea that went too far in the wrong direction. The last few clothing lines have not included enough interesting and basic pieces to attract the right segment of customers and, unlike more teen-upscale lines like Abercrombie or Aerie, wearing a shirt with the brand name across it isn’t signaling anything status-wise. The turn-around for styles was so fast you could buy a sweater one day and find it in the reduced aisle next week. And of course, the one you bought was already fraying. Having Old Navy be the “discount” Gap didn’t work well for Gap itself either. This year, both Gap and Banana Republic are still showing large losses. But Old Navy is pulling back: At its Gap North America division, same-store sales fell 12% for the quarter, at Banana Republic 13%, at Gap International, 4%, and at Old Navy -- the division that has been one of the worst performers of late -- the decline was just 3%. (In the same period a year ago, Old Navy's sales sank a steep 18%.)

Today if you walk into the store. there’s more actual basics being promoted – the tank tops, shorts, and flip flops that fit into a whole variety of fashion identities. One smart addition to the line are yoga -nspired exercise clothes. While fanatics of all sorts will still be decked out in brand names (LuluLemonistas we call them) , the Old Navy Athletica versions are versatile – a word I haven’t used to describe their clothes since they first opened.

This is not to suggest that the overall situation has changed – the Gap itself is losing ground, both because it’s a medium-end brand gaining a boost from celebrities wearing t-shirts to the Oscars (unless they can get Mrs. Obama to look beyond the J Crew catalogue). The consumer spending in that income bracket is getting more cagey, careful, and limited. That’s a trend that has to be considered durable, even if the recession lightens up. This is a message that’s most important for stores that depend on rapid growth, inexpensive and fast merchandise turnover, and single-category sales (clothing only versus Target, which can make up losses in one area with gains in another).

Moms After Mother's Day: Getting Beyond the Surface from Color to Culture

Mother's Day is over, so that small spate of men and children shopping urgently is quietly over. Back to the basic rule of retail sales: women do the vast majority of shopping and purchasing, whether in real or web-based sites. That goes double for moms, who tend to manage the purchases for themselves, the household, and almost all the other family members. That means the mom is the gatekeeper for cleaning products, household furnishings, clothing, pet food and products, and even, surprisingly, electronics and outdoor living items. In this economy, more women may be struggling to stay employed, but interestingly they are also among the demographic groups most likely to return or start working outside the home or telecommuting. Not surprisingly, media technology and electronic resources have become even more significant in women’s lives.

“Power Moms,” as Nielsen Online calls them, are those who have young children and use electronic media for social networking, advice, shopping, consumer savings, and text messaging. Despite the wealth of information in Nielson’s report, most women – particularly women of color – feel that marketers ignore their needs. While there has been a decided uptick in the number of mainstream ads that feature African American families (for reasons so obvious, we need not mention them…), a vast majority of marketing campaigns have yet to really address the different needs and concerns of women of color. Consider how marketing campaigns target Asian or Hispanic women without consideration for the ethnic and regional differences collapsed by those categories. Or, more importantly, how these women might have something in common as consumers that goes beyond race. A simple note: the vast majority of Oprah Winfrey’s viewers are middle class white women, but her opinions and choices carry great sway among women consumers of color.

Taking account of women’s consumer habits is even more important in the current economic times. Here's one consulting firm's nine simple guidelines for marketing to women.  However, despite better knowledge of segmented markets, marketing firms still seem decidedly slow to recognize that women’s retail behavior crosses similarities and differences in their outward status. For a good example, take a look at how marketers are stymied by racial differences in the social media landscape: BlogHer reported on this problem back in 2007, with a session infamously titled after one advertisers’s gaffe, “We don’t know what to do with you.” But according to Kim Moldofsky, a quick survey of women’s blog communities suggests that there is still a lack of outreach to women of color. Here’s a simple reminder: if the people in charge don’t look like their customers, chances are they’re going to have to work a bit to gain insights. This mirrors race relations in the non-digital world. Recent studies of racial attitudes and behaviors point to difficulties faced by whites who claim to want cross racial communities and friendships but find it exhausting trying to bridge cultural and social divides. While it’s clear that excuse doesn’t hold water for forging a more integrated society, it’s also a terrible limitation on marketing and sales.

One answer in the social media world is an upcoming Blogalicious Weekend in Atlanta in October, a conference designed to link blogging women of color to marketers, public relations consultants, and other advertising and brand-development executives.

Interestingly, in the M2M Neilson study, women of all races stated that they were most likely to take advice from others who had shared experiences and children in the same age bracket, two factors that were much more important than similarities in age, race, religion, or education. This suggests that marketers are really missing the boat when they presume that color determines cultural values and consumption. While it may be true in some cases, it seems clear that the complicated juggling act of motherhood and work is something many women share that can be experienced through online communities in ways that are, dare I say it, color blind? As Marketing to Moms CEO put it, “Moms share universal concern for their children, community and family…It is clear, however, that the way [women] react to the economy, rising food costs and the dreams she has for her children is impacted by her personal experiences, upbringing and ethnic background.”

Still, let’s not collapse all the differences: Although the majority of all moms have made household adjustments to cope with the family crisis, African American moms are more likely to delay major purchases to reduce shopping. Caucasian moms are using coupons and discount codes and driving less. Some of these differences are shaped by the fact that women of color are more likely to be in the workforce and are sometimes geographically concentrated in more urban areas where retail locations are scarce.

Women of all races were clear about the significance of the internet for their consumer purchases, there were some differences: When viewing advertisements, the majority of all respondents notice the product first, rather than the ad’s message. There was only a slight difference between white and black women in whether they always or frequently use a website before purchasing a product. The web is a gendered landscape, that's for certain, but marketing firms have barely begun to consider what that really means.

image of white and black barn owls from Daily Mail October 2008.

The Internet and the economy force retailers to re-think the experience

I've run across a few articles in the last week or so that point to a "new" trend in bricks-and-mortar retail: focus on the experience. Now, "new" is in quotes, since obviously a lot of good retailers have been doing exactly that for a long time -- just look at FAO Schwarz, Trader Joe's, or most recently, Apple. However, for many retailers, experience was put aside when Internet upstarts suddenly made price the number-one feature of the marketplace. While it was always important in the past, the Internet's ability to conduct real-time price investigation persuaded less-savvy real-world retailers to chop off anything and everything in the name of lower costs.

It seems like some retailers are finally starting to realize that they can never win that way. Case in point:

The Brand Experience Labs notes Toys 'R' Us is pushing the retail concept further, though in a decidedly downmarket way: "Toys "R" Us is looking to give shoppers a reason to visit its stores more frequently with the rollout of the "R" Market store-within-a-store concept that provides a wide range of kid-focused products including diapers, infant formula, baby food, lunchbox items, paper goods, health and beauty items, household cleaners and more. Each "R" Market will feature roughly 1,300 items in a convenient shopping format located at the front of Toys "R" Us stores. The chain currently has "R" Markets in 260 stores with plans to roll the concept out to all of its 585 locations in the U.S. this year."

On the one hand, moving high-demand items to the front of the store may make it more likely that parents duck in for a quick purchase without having to commit to an hour of walking up and down aisles -- more if there are kids in tow. On the other, though, as BEL notes, taking the "grocery" approach might backfire for TRU, who have counted in the past on their image as the largest toy store chain to capture the imaginations of children and parents alike.

Likewise, Target just today announced that they too are trying out a new bricks-and-mortar retail approach that sounds surprisingly like Toys 'R' Us's. As Mediapost notes (via the WSJ), "Target is transforming a corner of a hundred of its discount department stores into mini-groceries stores that carry a narrow selection of products from 90% of the food categories found in a larger grocery store, Ann Zimmerman reports. It may eventually add mini-groceries to most of its 1,300 outlets as the key to its strategy to reverse declining sales." While grocery never faced the same threat online as dry goods and durables (with the brief exception the PeaPod experiment, which, a billion dollars later proved to be completely non-viable), Target and others have found it increasingly difficult to play the price game. As convenience has been something that people have consistently demonstrated their willingness to pay for, it seems like an obvious place for Target to focus on.

If companies like Target and TRU are experimenting with new ways to stand out from their competitors on- and offline (but especially on), it shouldn't be long before we start to see others do the same. After all, online-only retailers and Walmart can't wind up doing all the business, right?