Sustainable Advice For Retailers and Consumers:

Despite the Downturn, Green is Still Gold

As the retail markets constrict and people consider their wallets above all other factors, the question for marketers is: what do people value?

“Green,” sustainable, and organic products saw a big upswing in sales prior to the economic meltdown that started in September. But given the fact that many of these items – especially organic goods – are often more expensive than their ordinary counterparts, can we expect that the demand for organic, green and other eco-conscious labels to remain strong? After all, even retail giant Whole Foods has, pardon the pun, beefed up its economizing marketing campaigns, with a new “Whole Deal” website that provides corporate and customer tips on how to eat well on a budget (“More of the Good Stuff for Less,” is the byline).

Industry watchers like the Organic Consumers Association claim that organics have not yet felt much of a decrease in demand. In fact, many argue that green is a great way to ride out the recession: greater concerns about the dollar mean that people are more likely to spend carefully, with every eye on making things matter. In June, Environmental News Network suggested that organics remained a strong concern, particularly among buyers who had deeply integrated green or sustainable products into their lifestyles. This isn’t the largest share of the market (they estimated 20%), but it might be enough to keep it afloat. Also look for luxury green items to stay in demand, particularly in Europe, where the taste for organic and local is more deeply integrated into everyday life and even government policy. Guides for the wealthy environmentalist (like the Green Connoisseur) are banking on the continued power of both kinds of green.

Another big tie-in for the sustainable market is cause-related marketing, which remains a very strong consumer concern. Companies like Annie's Mac and Cheese, Stoneyfield Yogurt, and Vita Soy promote causes on their boxes and container lids to raise funds for school gardens and breast cancer research. Stoneyfield even allows the buyer to shape donations by choosing the environmental charity they like best. The bottom line is that consumers have high standards for the philanthropic activities of their favorite companies and are well aware of the need for collaboration between business, governments, and non-profits in an effort to solve pressing social and environmental issues. Interestingly more than 90% of the Americans surveyed believe companies should tell them how they are supporting causes, but do not feel they are getting sufficient information.

Finally, some analysts are arguing that green is economical: Marketing Daily reports on banks and financial service companies that switch to environmentally friendly practices save themselves money, while also earning some much-needed good will from appreciative consumers. Deutsche Bank goes so far as to argue that banks should invest in sustainability practices because “increased spending on green infrastructure can provide enough economic stimulus to avoid a severe recession.” Another reason for companies to invest in green now? The sector continues to grow despite the slowing global economy. According to new figures from bank HSBC, companies in the climate-mitigation business now generate $300 billion in revenues each year. But while you’re at it, do your part to save paper and read the report online!

Luxury Blues: Singing "Stormy Weather"

Sometimes luxury markets have the easiest time weathering the ups and downs of the economy. After all, the people who can afford these items are often a bit more insulated from all the turbulence. This time around, however, the recession seems to be coming down hard on the whole retail parade, from the discount marts to the upscale boutiques. Even more distressing, of course, is the fact that the financial storm isn’t concentrated in one geographic area, but has hit international markets hard, too. According to the Financial Post,

Almost every stop on the retail spectrum is beginning to get hit, with reports of luxury spas starting to offer deep discounts and retailers such as Bergdorf Goodman offering free shipping as the holiday sales season ramps up early.

A quick survey of the luxury landscape suggests that people with a big stash of cash under their mattress are hording their pennies a bit, partly as a way of keeping above the potential flood waters and partly to keep a low profile. Surprisingly, in a culture that has encouraged a lot of profligate spending and visual "bling," many wealthy buyers are suggesting that it’s gauche to indulge while others struggle to keep their homes and pay the bills.

For example, a few weeks ago, Polo Ralph Lauren opened an enormous new store in Paris. At the same time, Executive Vice President Charles Fagan was quoted in the Wall Street Journal with this caution: "We're being prudent. We're very aware of our inventory and expenses."

Note though, that most of the luxury expansion is occurring in so-called “new markets,” like China, Russia, and India, where the base of wealthy customers has been rapidly expanding. Not so in the so-called "mature markets" like Japan and the US. Here in the States, things have changed since a May survey suggested that Middle Class Millionaires would continue to spend despite feeling an imminent recession. About half of those surveyed by The Affluentialist said that in 2008, they were planning on taking a vacation whose cost exceeded $10,000; More than half expected to be spending on home improvements, luxury cars, and second homes.

But here we are in November, and the news from a survey by consulting company Bain & Co. was not good. They predicted that the worldwide luxury goods market will likely enter a recession in 2009. According to the recent report,

"The impact of the financial crisis will bring some sectors into a recession," said Claudia D'Arpizio, a Bain partner based in Milan and lead author of the study. "How much and how long depends on part on how companies react. The most resilient will be those with strong international and diversified brands."

The two key points for retailers are in the last statement. First, it's still possible to reach key global markets – sectors where spending is still happening and luxury goods are still freshly affordable in developing economies. Second, it's really important to have a diverse but relevant set of products that resonate with wealthy consumers. Despite difficulties with brand loyalty in the regular retail market, the luxury sector relies heavily on the continued presence of aspirational brands and the power of the name. Expect to see more ad campaigns and design elements focused on tradition and longstanding value. After all, is it any surprise that Ralph Lauren, whose original inspiration was a reassertion of preppy WASP cache, is most likely able to weather the storm?

Monogrammed Wellies and a bejeweled trenchcoat anyone? If that's too much, maybe just some bright yellow to ward off the rainy day blues.

So What's Left in the Supermarket Basket?

In my usual market-defying fashion, I have spent the last few weeks shopping – yes, that’s right, shopping. In these economic times and everything. After all, what better way is there to avoid the mordant news, panicky marketing reports, and palpable fear of falling that emanates from every newspaper and web screen I open?

I admit I had an excuse: a big upcoming event involving visitors from out of town, relatives staying over, and me cooking for the likes of 100 people. Nothing too out of the ordinary, but it is a bit odd to be celebrating in the midst of economic chaos. At the same time, it’s helpful for those in the business of watching the market to remember that weddings, bat mitzvahs, and births all keep happening and people keep eating.

Over the next few weeks I’m going to comment a bit about the kind of spending I observed in my own less-than-systematic retail excursions and compare that to the news that coming out of business and marketing research and media outlets.

One of my main forays in the last few weeks has been to grocery stores. I did the usual cart watching as I debated the kind of food I intended to cook for the horde of guests. In general, I still see the same amount of people in the supermarket aisles on the same days as I did prior to the big Wall Street meltdown. Eating well is still important, even if it's being re-defined.

Indeed, there are a lot less carts packed to the brim. Are people buying less? I think so. In my retail excursions I made some of my first-ever buying trips to one of those big discount clubs (you know the like: Sam’s Club and Costco being the most familiar) – and yes, the section of computer printers, pots and pans, dishwares, and other gadgetry were empty enough to drive a truck down the aisles. A few yards over in the laundry detergent and soda sections, though, and people were stocking up as usual. I asked one woman about her choice of a six jar package of tomato sauce and she said, “Well, I don’t use this kind normally, but it’s here, it’s cheap, it tastes pretty good, and there’s a lot of it.”

Ketchum’s Global Food and Nutrition Practice did a recent study of food attitudes across the globe (see this link for more information about the study’s methodology), which demonstrated that price was way up there as a concern for US consumers when it came to food choices. That’s no surprise, as it’s common knowledge that people in the US are accustomed to paying less for groceries than their European counterparts. Cheap food is one of those unstated American values. To be fair, Ketchum’s study did show that Americans put taste and quality right up there as key factors in their food choices. But my informant at Costco captured one other trend that has marketers – and especially those brand spanking gurus – worried about how things will shake down in the ongoing crunch for consumer dollars: “brand names are increasingly considered inadequate as a ‘proxy or shorthand’ for this growing list of factors that matter to consumers.” Linda Eatherton, Ketchum’s director of Global Food and Nutrition argues that marketers will have to rely a lot more on social media and an appeal to successful consumer research in order to sell their products.

Indeed, high-quality private label brands from Safeway, Kroger and Publix to name a few have seen very strong growth during the first few months of this recession, clearly indicating that when taste and quality are about even, the cost difference between private- and brand-labels has tended to shift consumers towards the lower-priced goods. Expect to see more private label brands boost their presence in the coming months. As the line in Field of Dreams suggests, “if you build it, they will come.”

The economy's new threat: Pantry deloading?

I don't normally listen to earnings calls by public companies, but I found myself tuning in to Pepsi's call last night for some reason.  Their sales are tanking, and their stock was rewarded with a healthy beating this morning as a result. But for all the depressing news, I learned something interesting - it's a phenomenon called "pantry deloading," and Pepsi execs blamed it in part for their slowing sales.

Simply put, in good times, we tend to over-shop. If something's on sale, we buy lots of it and store what we can (assuming it's not perishable, of course). Fill-up trips are bigger than they need to be, as each of us basically builds up a small inventory of frequently-used or sale-priced items.

Fast forward to today, where more people are trying to stretch out every last dollar. Instead of filling up (or over-filling), we're emptying out those stores of sale-priced items.  So instead of sticking another 12-pack of Mt. Dew in our cabinets, we're dusting off the old 12-packs that we so cleverly purchased and stored some time last year.  And when it comes time to replenish the dwindling stocks, some consumers will go back to the name-brand stuff, but others might be tempted to try cheaper private-label variants from their local supermarket or discount stores.  Still others will simply decide to do without altogether.

So there you have it: pantry deloading.  Any interesting phenomenon with real-world economic effects and a funny-sounding name :)

Tags: pantry deloading, shopping, retail, business

America at Home

Ordinary People Provide the Best Glimpse into Everyday Life

If you’ve ever seen the book series, A Day in the Life or America 24/7 (photos from a single, day across America) you get an amazingly broad and deep sense of how people spend their days. Now, editor and photographer Rick Smolen has published a book of photographs of Americans in their homes – exploring everyday life, domesticity, and how people set up and enjoy their private spaces. Smolen believes readers get a glimpse into someone’s life or reminders of someone they know.

America at Home is a beautiful book, and, to my mind, the kind of social documentary that will eventually be a great historical record. At the same time, it’s an amazing document full of data about how people live, their relationship to the material world, the variety of ways in which we consume, construct domesticity, leisure, and community. Ikea, one of the book’s sponsors, is both sincere and savvy about what the book provides for the company and Americans in general. As they describe it,

IKEA is dedicated to HOME. We reached out and asked questions. And what we learned is 94% of polled Americans said that Home is the Most Important Place in the World. This finding is at the heart of the IKEA ‘HOME IS THE MOST IMPORTANT PLACE IN THE WORLD’ campaign that includes a compelling documentary film, a landmark study, and the America at Home photo-journalist book of everyday Americans taken by the world’s top photographers.

The interesting thing about this campaign is that everyone from market researchers to ordinary folks can get engaged in questions about how others live. Besides providing a glimpse beyond the living room window, the book situates the information in an easily accessible context about our world. Each set of images is tied to relevant statistics. The juxtaposition of fact and home image gives the exact type of context that marketers are always looking to find (did you know the average house costs ten times more than it did in 1970? Sure you did. But look what a variety of homes it buys!) This general information is then deepened with the inclusion of essays by Amy Tan and David Pope and an introduction by Matt Groening of The Simpson’s fame.

Finally, while I don’t want to reduce the book to fodder for the retail machine, it’s worth considering how Ikea and others might use it to see what people want and how they use products and spaces in ways other than they were intended for. It embodies the “active listening” that the Advertising Research Foundation has been pushing in its recent workshops, but does so in a way that is interesting, informing and entertaining all at once.

For more than you ever wanted to know about America At Home, there’s a terrific podcast interview with editor Rick Smolen on the IT conversations website.

Natural -- As Nature or Marketers Intended It?

Anyone who buys from the organic end of the food aisle knows that labels are designed to be confusing, misleading, and downright annoying. In my local supermarket there are now four or five different kinds of eggs in the "natural" refrigerator case. I can get cage free, which means the chickens live well. I can get organic, which means they ate okay and now I will, too. There are also High Omega 3 and Certified Humane options. Or I can get cage free and organic eggs, which means I'm now paying 40 cents more per dozen than I would be if I just bought the ones that say "natural," which, apparently, means nothing except a 40 cent savings and a few worries about just how safe and/or ethically farmed these eggs might really be. My supermarket, like many, also has its own product line that prominently features the word "nature" -- but I'm still sticking to the Newman's Own Oreo-like cookies rather than their brand because I can tell what "organic" actually means.

Unfortunately, "natural" stopped meaning "safely made in nature" a long time before the USDA got in on the act and started certifying all sorts of things as "organic." Indeed, recent lawsuits in California concerning "natural" cosmetics that were found to contain known carcinogenic chemicals have prompted the FDA to take interest. Perhaps it's too late to rescue the word from its confusing mass of associations -- although a small bakery in Colorado, Rudi's Organic, has made some good noise with its clever commercials parodying the supermarket "all natural" breads that contact such healthy-sounding ingredients as "azodicarbonamide."

In his wonderful book, Appetite for Change, Warren Belasco charts the whole foods movement of the 1960s and 70s (and this was before that term -- whole foods -- was co-opted by a giant supermarket chain in fancy green clothing), when the move back to nature was a collective response to the industrial food system. Brands we now take for granted, like Celestial Seasonings Tea, were once small, alternatives to the big corporate food-in-a-box. But then home made granola morphed into chocolate coated breakfast bars and...well, you know the rest of that story. Belasco documents what feels like an inevitable hegemony of big business and money making over creating alternatives. What's unfortunate, of course, is that more and more people want natural and organic products -- and big companies often do have the potential to generate and support these items.

Burt's Bees is a brand that still feels like something out of the whole foods movement of the 60s. There's the great story behind the company -- Roxanne Quimby "finds" her way to Maine, befriends Burt Shavitz, an older man who's a beekeeper, starts a small business that they promise to keep to ethical natural standards -- and then sells out to a big conglomerate for millions while Burt got a small settlement and is rumored to be living back in his original turkey coop. Let's remember that she sold not just any conglomerate either, but Clorox, which sounds like the home planet of bad household chemicals.

That could have been the end of the story, but Clorox is actually working hard to prove that it's products can be as natural as any small-time competitor's. They're also working to ensure the integrity of many of Burt's original products like lip balm, sunscreen, and baby lotion (a recent profile shows the CEO John Replogle eating avocado butter face cream to prove it has nothing "unnatural" in it), but as the line expands into new territory, one wonders how soon it will be like other niche product lines that lose their uniqueness as they widen their appeal.

One way that "green" companies try to prevent this dilution is by developing industry-wide certification standards. Organic florists are a good example with Organic Bouquets, at the forefront creating and enforcing standards, developing certifications and selling and listing a variety of types of flower certifications. Similarly, this spring the nonprofit Natural Products Association launched a certification program which will certify products as natural if they contain at least 95 percent ingredients from renewable resources found in nature, with no petroleum compounds. According to the president of Dr. Bronner's Magic Soaps, "Organic products aren't necessarily inherently safer than non-organics. But if they're certified and not making bogus claims, it does guarantee they can't use a lot of problematic petrochemicals."

While letting companies certify in this way (and thus get to put the spiffy little logo on their packages) is a terrific idea, the real challenge will be for marketers to either pull back and try to make "natural" a meaningful word again (unlikely) or find a new way to attach integrity and certainty to the type of products consumers want. So, until I have a better idea of what "natural" means in industry-speak, I'm probably going to keep shelling out (pun intended) the extra forty cents for the organic eggs.

I'm just not ready for a hen house behind the basketball hoop

Marketing takes the blame -- or helps initiate change?

Advertising Age recently profiled a study by Sonya Grier, a research scientist who found that the types of food and beverages marketed to African Americans may contribute to rising rates of obesity and other health-related issues. I hate to point this out, but doesn't this seem like the wrong kind of niche marketing? Grier's conclusions sound right on target: higher calorie products are placed at the point-of-sale displays, convenience stores are ubiquitous while grocery stores are not, and promotions emphasize fast food restaurants. Advertising does play a role in what happens. At the same time, let's not overstate the causal relationship between marketing and behavior.

Still, in this case, advertisers really should tread much more carefully, There's a long history of problematic advertising in particular communities. While African Americans span the socioeconomic spectrum, the percentage that live in poor or working class neighborhoods is higher than for many other racial groups. These neighborhoods have long been the terrain of tobacco and alcohol billboard advertisements, trying to capitalize on an already vulnerable population. In the 1970s, when African Americans made up 10% of the population, sometimes up to 20% of a tobacco company's advertising budget was spent on black neighborhoods. Current studies on the effect of alcohol advertising find that alcohol advertisers spent nearly $4.8 million in 2004 to place ads on all 15 of the programs most popular with African-American youth. Studies in Chicago show that all communities --African American, white, or Latino -- with "imbalanced food environments" -- meaning no real supermarkets within an easy travel distance -- greatly increased people's chances of getting diabetes or having a diet-related life threatening health issue. It's not the obesity that matters, per se (although the grant that Grier is working on is specifically funded to target obesity), but the health issues that come from lack of access and choice. Also keep in mind that there's currently no data on whether we're looking at a cause-and-effect scenario, or whether it's just coincidence (which the study will surely look into as well).

Perhaps its seems odd, though, that advertisers would feel it necessary to pour marketing dollars into areas where people already don't have a choice in what they purchase. So why do it? Partly because advertisers may not believe they have a captive audience -- or they want to keep it.

For a more nuanced understanding of the issue, all aspects of social environment need to be considered. In Grier's studies, she found that other health risk factors included: having a social community that valued or enjoyed fast food and living in areas that lacked opportunities for outdoor activities, sports, and school-sponsored play. Consider how difficult shopping must be: Markets in African-American and low-income neighborhoods have fewer healthy foods, and residents may have limited space in which to store fresh and frozen produce , making it more difficult to follow a healthful eating pattern even when desired. According to a recent research summary in Nature, a key variable is the way African Americans perceive their buying power (or lack thereof) in areas with limited local food availability. While there are numerous campaigns to fight diet-related illnesses, eliminate tobacco and alcohol advertising in low income areas, and bring supermarkets and local food to African American communities, Grier does hit on something missing. The advertising and marketing to people in these communities needs to change. Currently, most niche marketing campaigns to blacks focus on the upwardly mobile and wealthier African American professional class (remember my blog comments about gaming and people of color? They're one of the few markets that is starting to recognize that not all black consumers come from the very wealthy or the very poor segments of society). But for the most part, advertisers want to sell black consumers the "Real Desperate Housewives of Atlanta" version of reality: For example, Glam Media has created a new web and blog network devoted to African American women, but its sponsors include Lexus and its focus is on high end beauty and fashion.

While it's nice to see multi- media campaigns being targeted to a new audience, it'd also be a great opportunity for advertisers to tap in to a collective identity and create spots that help shift cultural values towards healthy living for everyone. Honestly, how often do you get to feel like you've done something virtuous and profitable all in the same afternoon?

The death of the survey?

I recently got a survey in the mail and I actually did something I haven't done in years: I filled it out. It was the first "traditional" marketing survey I'd gotten in what felt like a long time, and there was a crisp, flat dollar bill attached to the letter. So, whether I threw the survey away or sent it back (I honestly don't remember), I had a dollar. Or at least, I did until one of my daughters needed money while we were at an ice cream stand.

Surveys and polls used to be the mainstay of social science and consumer research. We know more about ourselves as a society than perhaps we should at this point. And honestly, there are a lot of really ridiculous and ultimately meaningless uses of survey data out there. And then, of course, it's piggybacked onto data that isn't meant to be used in the way it's being used.

Of course, maybe I'm the only one who finds the whole "freakonomics" approach to social knowledge is snake oil -- I mean, I must be, since it's spreading like crazy. Amazon recently used their sales data to create a "blue and red readers" map of the United States, suggesting that the purchase of certain political books over others would peg the individual (and eventually the state) as a Republican or Democratic. But based on my recent book recommendations, Amazon also thinks I'm a serious dieter, a heavy wine drinker, an evangelical Christian who's also interested in Jewish mysticism, a science fiction freak who also wants to learn how to draw birds, and possibly going through puberty. It might be possible to draw some inferences about why people in Texas bought more "red" books and people in Massachusetts bought more "blue," and yes that does coincide with their voting patterns -- but only by a five percent margin of difference within each state.

Moving back to marketing data from surveys, even the retail industry is becoming less certain about their usefulness. Proctor and Gamble and Unilever are working with the Advertising Research Foundation to focus more on different ways of gathering consumer information, such as blogs, social networks, and consumer feedback on websites. The emphasis is on "mining consumer insights online." That may be an interesting new source of information, but again, it's still data that can't really tell enough about how or why people use products. And while surveys get tossed in the trash, recycled, or filled out incorrectly for a lark (yes, we've all done this), there is at least a small chance that the researcher can exercise a bit of control over the sample. The Advertising Research Foundation is pitching its approach as "learning how to listen," an insight that research methods in sociology and anthropology have insisted upon for many, many years. Despite the ascendency of survey research, for its "feel" of scientific certainty and the immediacy of results, even quantitative social scientists know that good research design is both inductive and deductive.

We're not at the end of survey data, by far, despite predictions based on the ARF's push for new insights into consumer behavior. Even so, the deathknoll might push more companies towards good solid ethnographic research, where researchers can see the difference between what folks are willing to say on social media and what they actually do. And then maybe someone can create a red and blue map that actually tells us something useful!

Dollar Days and Ninety Nine Cent Nights

...But Not in Texas

Dollar Stores are a hot news item these days, as the discount market grows its share of spending from budget-conscious consumer. So while Walmart and its ilk are doing reasonably well given the overall trend towards buying less, the Dollar and 99 Cent Stores are expected to increase sales thanks to shoppers who want to stretch their paychecks a bit more. Despite the sense that people who shop at discount dollar stores are struggling financially, the numbers indicate that these stores (along with big-box stores like Walmart) are gaining popularity with more affluent shoppers too. To wit, 99 Cent Store CEO Eric Schiffer claims their most profitable store is on Wilshire Boulevard in Los Angeles. Even so, for the dollar stores the current economic climate is a mixed bag (not unlike those surprise goodie bags they have at the end of the toy aisle). Some are doing well – both Dollar Tree and Family Dollar report increases in sales and profits in August:

Higher household costs have sent shoppers into the nation's largest everything's-a-dollar chain looking for better prices on food, cleaning supplies and health and beauty products, said Bob Sasser, Dollar Tree's chief executive…While in stores to buy those needed items, customers also bought more party and summer-decor goods and graduation gifts, Sasser said.

But others like the 99 Cent Store are having trouble deciding whether they can really maintain their promise to keep everything in the store at 99 cents. One of the only “true” dollar stores left, the company blamed inflation and rising food and energy prices for its new prices. It will also have more variable pricing under the 99 cent range (previously, all items were either 99 cents or two for 99 cents). The increase means the maximum price in the stores will still fall below a dollar while helping the company offset some of the higher costs of doing business. And lest you think these discounts are being purchased through cheap overseas labor, CEO Shiffer explains,

“The vast majority of everything we buy is made in the U.S.A. That surprises a lot of people. We sell mostly food, cleaning products, which are water-based and very heavy to ship. Health and beauty care products — again, water-based, so the shampoos and everything come from here. Our imports are probably about 15 percent. I would say the United States is by far the lion’s share.”

Some chains can’t quite hold on to the promise of the name: Canadian store, Dollarama will introduce three new price levels - $1.25, $1.50 and $2 - though it says the majority of items will still sell for $1.

"After 16 years at a dollar, we've found in the last few years sourcing dollar products has become a little more difficult," Dollarama chief executive officer Larry Rossy said in a rare interview. "Meanwhile, during our recent buying trips [to Asia] we were consistently offered 'wow' items at the $1.50 to $2 price point."

Although jokes and skepticism abound about the quality and freshness of food at these deep discounters (there are websites, programs, and cookbooks on cooking from the dollar store), the chains are actually adding more refrigerator cases, stocking more brand names, and selling food more than any other item.

People buy more than “dollar” items at these stores – witness the increase in dollar bargain bins at supermarkets. Target strategically places a rotating selection of one and two dollar items right near the entrance (because you didn’t know you needed a pair of knee socks with dancing monkeys! And a set of four ornate chopsticks in a silk holder!) These items are sometimes $2 or $3, as is the case in other discount “dollar” stores. But if you want to stick to the real thing, the 99 Cent Store gives you the pleasure of spending a dollar (not less, since there’s no change for those 99 cent items) unless you live in Texas, where all 40 stores are being closed for lack of profitability. This just means you have to hope in the car and head over to California, Arizona, and Nevada, where there are 230 stores that contribute approximately 90% of the company's sales. Be sure to pick me up some of those monkey socks and antibacterial soap along the way!

The 21st century superstore: mini or mega?

Up until recently, “bigger is better” seemed to be the best retail mantra around. Walmart redefined our notions of shopping, and despite all the critiques of “big box” stores, they seem to be here to stay. But the Clash’s song “Lost in the Supermarket” rings truer as the aisles get longer and full of even more varieties of the same product. Recently I stood, like Robin Williams’ Soviet immigrant character in the old movie, Moscow on the Hudson, apoplectic at the variety of granola bars that take up one slice of the breakfast foods aisle. My new grocery store, Giant Eagle, certainly captures the first part of its name well.

So, imagine my surprise when a new little store (with gasoline pumps) opened just off the main highway, called Get Go – at first I thought it was Giant Eagle masquerading as a convenience store and refused to go in. But then my less cynical partner-in-crime stopped there on our way out of town, hoping we could stock up on decent travel food before we were trapped in rest stop fast food hell. Sure enough, there was a produce section, fresh fruit, a small but very lively deli, baked goods, and about four or five very short aisles full of an abbreviated version of what appears in my regular Giant Eagle (because, trust me, paper towels and zinc lozenges are also indispensable on a long drive…) The coffee section had a few tables and wireless connection, just enough space to sit for a bit if you need to check your email before heading out. Lo and behold, just last week the New York Times profiled that very same Get Go in a piece examining the trend towards mini stores.

Apparently, my Get Go is just one of many new minis planned across the US: Safeway, Tesco, Whole Foods, and yes, even Walmart are all testing the mini store concept. Tesco’s version, Fresh and Easy, is open in Southern California, while Walmart is getting ready to launch its Marketside store in Arizona and San Diego. Recognizing consumer needs (buying groceries quickly instead of gaping at thousands of brands) is not the only reason for this move: San Diego has been engaged in a long fight over supercenters within the city limits.

Lest you think it’s all about food, note that groceries are not the only shrinking retail outlet. Macy’s, which has been struggling to keep itself in the black, has done well with a “mini” Bloomingdales in New York’s SoHo neighborhood, and plans to expand the idea to California and Washington DC. Not that they’re the first: there’s Barney’s Co-op, which began as a concept-store-within-a-big-store and now has some freestanding outlets around the US; and Neiman Marcus’s Cusp stores which have been open in Georgetown, Tysons Corner, and Century City since 2006. In this case, the stores are marketing to a particular demographic (young hip women shoppers) rather than a general “shrink it down” spirit.

While I like the mini trend for a variety of reasons (accessibility, good products, less taxing on the environment, less emphasis on endless variety and more on a few good things), I also recognize that what makes the mini work is the mega parent behind it. Who can afford to take the risk and open a small retail business with such a mixed inventory? Only someone who's already safe in the land of large scale sales, and already knows what the most popular products are.

Of course, the real irony is that Walmart, Whole Foods, Giant Eagle and the like are essentially re-inventing the corner store that was originally displaced by the mega-super-centers that these companies started out with in the first place.

Heinz: From red to black with ABC Soy Sauce in Indonesia

Just a small follow-up to a story I wrote about here in June, Heinz Food Corporation is indeed capitalizing on the trends I mentioned, particularly by targeting food products to consumers in different countries. Sure enough, moving from the red to the black has meant that, while the brand is still deeply associated with its Ketchup, its ABC Soy Sauce is steadily catching up as a leading item – and a brand they can extend. ABC is emerging as one of the best selling brands internationally of soy sauce. The Wall Street Journal profiled Heinz’s Southeast Asian success and explained,

There are essentially two types of soy sauce: kecap manis, a molasses-thick sauce often sweetened with palm sugar; and kecap asin, a thin, salty sauce. When ABC's kecap asin was introduced in the mid-1970s, it was sold in a glass bottle at a premium price. Eventually, ABC expanded into kecap manis, as well as lower-price smaller plastic bottles and single-use packets that now cost about 200 rupiah (two U.S. cents), helping it develop a loyal following among working-class rural Indonesians.

Part of the success comes from “tweaking” the product: Heinz has worked on the taste (not as salty as it was when the company acquired the brand) and the packaging, coming up with a better pouring spout and other new design elements. According to Business Week,

Chris Warmoth, who heads up Heinz's Asia-Pacific operations, notes that "nearly all households in Indonesia use ABC." That wouldn't seem to leave a lot of room to boost sales of its sweet dipping soy sauce, or kecap manis. So the company has introduced new products and tried to encourage broader consumer use through a "culinary academy" where chefs come up with new ABC recipes. (Up next: suggested nonalcoholic drinks made with ABC flavor syrups for the Muslim celebration of Ramadan, which starts on Sept. 1.) Heinz also added a new pouring cap for the soy sauce bottle and introduced lighter plastic pouches, a potential selling point to the majority of Indonesians who lug their groceries home.

Backing up their sales, ABC donated more than 1 billion dollars in aid money to Tsunami victims in 2005. The continued presence in Indonesia, both philanthropic and economic, has paid off, as Heinz ABC has shown greater profits and steady sales while many other food companies are faltering. Soy sauce has migrated out of its original place as an Asian staple and into a global food, which should help Heinz sell ABC in numerous markets, but at the same time, it’s smart of Heinz to keep ABC strong and flexible in its original context.

Gurus, Geeks, and Geniuses: Courting the computer store customer

Okay, so I love my Mac. I still think the iPod is not only the coolest thing ever invented (despite recent drops in sales and the "less than impressive" presentation of the new lineup this week), but it’s like all Mac products: sleek and beautifully designed. And I think I've made clear how I feel about the iPhone. So there, with my biases on the table, I’m still trying to weigh in objectively about the newer retail service trends for personal computers.

Gather ‘round the campfire, as the nights are getting cool and it’s time to tell those Apple Store stories from the summer…

Here goes: in the last month I've made five (yes, five) visits to four (yes, four) different Apple Stores in three (yes, three) different states. Don't make me explain. Well, okay, you can find the longer version on another blog. But let's just say that lately I've had some good opportunities to observe the "Service is Marketing" mantra in action. For anyone who hasn't had the same multi-state retail pleasures, let me assure you that the system works.

Ah, the Apple Store! The Concierge in the orange t shirt directs you to where you need to go without trying to sell any product unless you ask. While you wait for your Genius Bar appointment, you don't have to browse. There are bar stools so you can hang out until your name appears at the top of the appointment list, which you can check on the digital sign behind the bar. The Genius bar staff, with their blue or black t-shirts, only do technical and mechanical support. They will sell you what you need -- but the two Geniuses who ended up having to sell me something beyond my repair bill almost seemed surprised to ring up an item rather than print out a tech report.

Apple has a good thing going. And of course, since it's working, Bill Gates is getting into the act: recently Microsoft announced that it’s going to introduce Gurus into major retail stores to help consumers with their PC problems. The goal is to get people to “think Microsoft” – but the problem is in confusing help with sales. Most people will likely need assistance due to problems with Vista. Microsoft's new commercials with Bill Gates and Jerry Seinfeld are entertaining, but they seem oddly disconnected from reassuring people that the product works or can be fixed.

Consider the taxonomy of employee names: A Genius knows how to fix your problem. A Geek supposedly can diagnose what's wrong, but I'm suspicious about his or her level of training for the retail job at Best Buy. "Geek" implies something of a hacker mentality. But a Guru? A Guru gives you advice about what to do rather than doing it for you. For Microsoft, the spiritual oneness we all desire with our computers (i.e. instantaneous response time) doesn't come from the gritty work of repairing the darn thing, but in selling one that works better in the first place.

When the "Service as Marketing" mantra works, it's because (especially with new technology and computers) most people lack is the ability to fix or work the item themselves. I live with someone who has a PhD in computer science and I still ended up a the Apple Store five times...

The color-coded t-shirts are more than eye candy in the white and grey store – each denotes a job title and only some are there to sell. The Gurus don't have that luxury. As much as I believe a sales representative should know a lot about the product they’re selling, I’m much more confident when I meet someone whose job is solely to fix things and not sell you a new one.

The point here is this: in each of the Apple stores, in each of the three states, on all five visits, the experience was exactly as it should have been (even in the one where they couldn't help me). For example, I'm deliberately avoiding any iPhone temptations and even though I had to walk right by them on the way to the Genius bar, there was no sales person to push in the wrong direction. On one visit, while I was waiting for repair work, my teenage daughter spent the time playing with iPods, unhassled by salespeople. There was one section with tables that are low to the ground and have small chairs. Around the table are screens with Mac game demos running for younger children. And with a list of appointments visible on the digital display, I knew when it was my turn and didn’t have to ask, even though the concierge would check in on me occasionally.

While Gates' Guru program is using his vast resources to take a step in the right direction, it can't rival the Apple Store in the long run unless Microsoft is ready, willing and able to take over the entire store experience, from product selection to staffing to layout and merchandising. And let's not forget corporate culture.

One thing that Apple understands better than its rivals: like the man behind the curtain in the Wizard of Oz, most of us don't really know how the thing works. People need non-judgmental guidance without a heavy sales pitch waiting in the wings.

Gentle guidance is good marketing

Recently, Mass Mutual launched a new set of ads that they’ve been describing as “thoughtful.” When was the last time you heard a marketing campaign that was “thoughtful?” Aggressive, creative, innovative, suave, - sure, marketing comes up with every adjective possible, but "thoughtful" could mean you actually want people to think about what’s been sold.

That, I suppose, could be dangerous.

In reality, Mass Mutual’s newest campaign is much more than thoughtful. It’s smart. Taking back the notion of what really counts in life from those annoying MasterCard “priceless” ads, these spots show people making what are, subjectively, good decisions in their everyday lives. According to Forbes,

The campaign is an extension of the company's core position and tagline -- "We'll help you get there(sm)" -- that underscores the company's understanding of the real, practical issues consumers face when it comes to life insurance and retirement, and positions MassMutual as the company that helps consumers take the steps that are right for them.

Creative executions pose the philosophical and practical question: "What is the sign of a good decision?" The decisions captured in the executions are all real, almost everyday scenarios, like cutting short a fishing excursion to head for safe harbor at the first sign of a storm. Like real life financial decisions, the scenarios depicted all have consequences that can affect people beyond just the decision-maker. The campaign illustrates the value and confidence that come with making sound decisions for individuals and families, small business owners or plan managers at major corporations.

It doesn’t hurt that the ads have great soundtracks behind them (Bob Dylan on the one where a father decides to move his top-of-the-skyscraper-amazing-city-view office to his home after looking at a picture of his young daughter). Or that MassMutual puts a lot of family-friendly policies to the test in its own workplace. They've also sponsored a two-part documentary on PBS about retirement decisions and financial stability.

From a retail and advertising standpoint, engendered trust and a sense of guidance are some of the most difficult things to “sell” to customers. Not to mention that the company aims to do this at a time when established financial institutions are in trouble one way or another. The emphasis on gentle guidance is what works here – moving away from the hard sell to the simple straightforward assurance is the right move, especially for a company that could, in fact, play on people's anxieties in an anxious time. You can bet this approach won’t be appearing all over the advertising landscape, but it might not hurt for companies to stop and consider what exactly they have to offer that would make consumers choose one brand, one company over another. Brand loyalty is, of course, better if it’s actually earned.

Tags: advertising, branding, retail

Aldi to the rescue during crunch times?

I've never been to an Aldi store, but after reading Tim Manners's take on them in a recent Cool News of the Day post, I just might have to. Owned by the same group that owns and operates Trader Joe's, Aldi stores are apparently small, intensely focused on private label goods, and even more intensely focused on low cost. How low, you ask? Well, as Tim puts it,

"Aldi’s focus on cutting costs makes Wal-Mart look almost like Whole Foods by comparison. To save costs, Aldi doesn’t take checks or credit cards, it provides neither bags nor baggers and you even have to pay a quarter to use one of its shopping carts (it’s refunded when you return it, saving Aldi the expense of an employee to round up the carts)."

While such tactics might have turned off some shoppers in the past, with inflation rates rising and the government handing over billions of taxpayer dollars to fund bailouts of entities that should never have been allowed to exist in the first place, even upscale shoppers are looking for new ways to save a buck. Consequently, Aldi's has been growing by leaps and bounds, and expects to add another 100 stores in the US in the coming year, bringing their total to 1,050. Want a box of Raisin Bran for $1.50? How's about a frozen pizza for under $4? If so, Aldi's might be for you.

Me? I'm waiting to see what happens to the price of Trader Joe's (in)famous Two Buck Chuck before setting out to yet another new shopping destination.

Guess I'm just a creature of habit.

Tags: retail, shopping

Supermarket Wars: Giant and Stop and Shop aim for the almighty food dollar

Two big food retailers, Stop and Shop and Giant are both re-vamping their look and their products in order to keep customers from flocking to supercenters like Wal-Mart during tight economic times. The trunk of my van holds about ten reusable shopping bags: about a third from Giant, a third from Stop and Shop, and the rest from Whole Foods, Trader Joe’s, and miscellaneous sources. That does a fair job of capturing the distribution of my grocery shopping time.

Both Stop and Shop and Giant are my local stores (one in MA, one in PA). I’ve already confessed to being a snob and a skeptic about Wal-Mart, so I’m biased in favor of my two usual spots. I also spend a lot of my food budget at a local farm and the farmer’s markets. But I’ve also been riding the economic waves, one minute a semi-affluent shopper with lots of choices, the next crashed under a tsunami, hoping I might have some unexpired double coupons stashed in one of those bags…

So, is it good that Stop and Shop and Giant are competing mightily for my time and dollar? Absolutely. Despite the numbers that suggest more affluent shoppers are headed over to the big discount mart, I’m doubt it’s saving anyone a whole lot of money – it’s certainly not, in the long run, doing its share to improve the economy. If the folks with disposable incomes are doing the discount dance, who’s left to put dollars back into the system? We should be on their cases for not doing their patriotic duty and consuming at the level at which they are supposed to…

But seriously, regular grocery stores should be doing all they can to keep customers coming in. This summer I was happy to see how much local produce S&S had featured – almost everything in the front-of-store display, in fact. Giant Eagle can’t compete on that score – Massachusetts has an extensive network devoted to promoting local produce.

Among the new introductions are expanded private label offerings, an increased number of fresh prepared foods, including soups, new fresh-flavored rotisserie chickens and more hot and cold side dishes. The store will also offer shoppers a handheld scanner device they can use throughout the store that checks prices, keeps a running total, and generates brand-related coupons for products as they shop. ... A Delivision kiosk allows shoppers to place deli orders when they enter the store, so they don't have to wait as long on line. The company describes the changes as "a further step in Ahold's global strategy to create powerful local consumer brands"

These are interesting, but not all the things I’d feature if I were them. For example, I’d like to see the store brands get better press. My kid are now enamored of a store brand of cereal that mimics Lucky Charms. This is good for both me and them because...

a ) Mom won’t buy Lucky Charms but the generic brand slipped by her in the cart last week because
b) it comes in a big economical plastic bag instead of a box and
c) it cost a THIRD of what the name brand cereal did and
d) it had a cool name (Hocus Pocus!!!)

So, yeah, it’s going to show up in our house a bit more often as a treat even though it doesn’t meet our basic healthy food. A product that makes us feel like we got a lot, got a bargain, and got something we like is key. So much of what’s in the supermarket today is extraneous to the whole idea of actual food, I'm a bit of a softy for treats that aren't completely mired in corn syrup.

At the same time, both Giant and Stop and Shop still has a ways to go in improving store layout and design and in that category, they should take a page from Whole Foods rather than Wal-Mart. My main Stop and Shop was recently renovated but was still fluorescent and difficult to navigate. The “health” foods are relegated to their own ghetto at the very end of the supermarket, near the pharmacy; other than the nice display of local foods, the produce lacks the verve of Whole Foods and the bakery is just a fancy bread counter. In contrast, our renovated Whole Foods has a great new bakery with the smell of fresh loaves and -- who can resist a little snobbery after the Lucky Charms? --- a gelato bar!

Do you think we can get Giant to look into that option?