There’s a Wider Gap Between Big Spenders and Penny Pinchers

Between a fluctuating unemployment rate, irregular spending patterns and a cultural shift from COVID-19, we’ve seen a much wider gap form between heavy spenders and those looking to save. This is largely attributed to the unexpected nature of COVID-19 and all the events that followed it, leading many consumers to reflect on their spending habits.

Prior to the pandemic, there was a larger pool of those looking to spend, but since, some have had to make adjustments. This wealth disparity has led to a need for further segmentation of retail audiences, forcing retailers to adapt accordingly.

Retail Supply Chain

From face masks to paper towels and disinfectant wipes – you can’t argue that we saw a massive surge in demand for certain products. With this, most only considered the impact this may have on the manufacturing side of things, but few looked at the logistics of it all.

Professional freight carriers had to rethink their supply chain to accommodate this almost-sudden rise in demand for just certain products. The process of coordinating with manufactures, to finding more efficient routes to match the rises in cost. Just as they did with the rise in the frozen supply chain, freight companies had to leverage new tech to project and plan given outcomes that yielded maximum results.

Huge Threats to Luxury Brands

With a sharp decrease in buying power among the average consumer, fewer people have the resources to splurge on the ‘unnecessary’. As a result, lower-tier luxury brands have made the switch to a more inclusive position to accommodate this dip in buying power, whereas top-tier luxury brands are doubling down. In time, this could mean gradual price increases to supplement the lack of volume in sales they’re seeing.

However, this could create a new opportunity for smaller brands to break into the low-tier luxury space. Only time will tell how the world adapts to the economical ramifications of COVID-19.

Brands Are Still Focusing on Customers Experience… From A Distance

For retail brands, the products they offer only make up so much of their true value. In fact, it’s a lot less than most people realize. People shop from retailers for the experience – and if they can’t capture that essence in person, brands have decided to shift to more socially distanced measures.

Live Video is allowing brands to take their customers ‘behind the scenes’ for a more intimate experience. Augmented Reality is allowing brands to improve engagement, taking customer loyalty to the next level. More emphasis on eCommerce to compensate for their lack of in-store foot traffic.

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Position Your Most Popular Items in the Back of the Store

You may have heard this one before, but either way it’s too important not to mention. By placing your most popular items (some of which people will come to your store for), you’re forcing customers to walk through your store TWICE. Going to the front and the back again. By doing this, you’re opening the door of possibilities for customers to see something they like and possibly buying something they might not have been planning on. Just think about it, the more items they see, the more likely they are to buy something.

Place Smaller Items Near the Cashiers

Another common, yet super important tip to implement. Place some of your smaller, more accessory-based inventory towards the front of your store, or wherever the cashiers are. This is where the lines form, meaning customers will have no choice but to see these items while they wait. The reason you should place small, accessory-based is because people are more likely to make impulsive decisions and the size makes them easy to store in their cart or hold in their hands. Think phone chargers, wallets, movies, stuff like that.

Offer Free Wifi

Everyone loves Wifi, especially when it’s free! Just have them enter their email address for access. When they sign into your Wifi, they feel more comfortable, therefore will stay longer and even better, you can send them email promotions.

Encourage Social Check-Ins

Any marketing professional will tell you word-of-mouth marketing is stronger than any ad campaign. This is because people trust their peers more than brands, so their endorsement will have more impact. Encouraging a social check-in (like on Facebook) is a great way to get immediate word-of-mouth exposure and set a reminder of your brand in place of your customers social media profile(s). Simply offer a discount in exchange for a check-in.

Utilize Customer Surveys

Want to get into the minds of your customers? You don’t have to hire that psychic down the street, you just have to ask your customers. Entice them to take surveys (maybe send them an email after letting them use your Wifi) and position the ask as a way to improve your customer experience. Offer them a coupon in exchange for an honest review.

Compiling enough surveys will give you a good idea as to what your customers are looking for and how you can improve their experience moving forward. And actually implementing these changes will tell your customers you’re actually listening, which will impress them and cause them to tell their friends leading to, you guessed it, word-of-mouth marketing.

Analyze (and Learn From) Foot Traffic Patterns

Just as digital marketers invest heavily in analyzing website traffic, you have to analyze foot traffic. Start by tracking what times of the year/month/week/day people are coming in and making observations. As an example, bar/restaurants use happy hour as a way to drive traffic during slower times of the day. You have to implement your own version of happy hour if you want to secure a steady stream of traffic.

Create a Customer Experience

You know what consumers look for? An experience, because that’s not something you can necessarily buy. That’s what large brands are selling, experiences. Creating a unique experience in your store will drastically increase the chances of customers buying more, coming back and telling their friends. Use compelling images on the walls and place your products strategically to transcend the traditional shopping experience.

Double Down on Loyalty Programs

Not everyone will take advantage of your free Wifi, so you should be investing heavily in your loyalty program. Offer exclusive offers in exchange for their email address, then provide special discounts and incentives for larger purchases.

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Store closings and a change in spending behavior have forced many retailers to furlough employees or even permanently close their doors. These changes are causing substantial economic impacts on communities and individuals when just a few short months ago many of these areas were thriving. These hardships will be felt for some time to come and continue to impact the retail sector.

While the crisis has substantially impacted in-person shopping, retailers have looked for creative ways to maintain a safe approach to providing goods and services to their customers. Many big and small retailers set up delivery options as well as curbside pick-up. Consumer behavior has also shifted to online avenues. Brands with an online presence are seeing a way to survive and even thrive during these uncertain times. Retailers that were positioned well before the pandemic are likely to be stronger after the pandemic. Those who were teetering prior to are likely feeling the devastation. The retail landscape could see a real shift between the winners and losers.

As retailers look for ways to adapt to the post COVID world, focusing on meshing your online and offline efforts will be key to survival. For the consumer, having your online offers match what is being sold in your offline store will be crucial. For the retailer, planning and executing inventory from distributors will be the challenge. Those companies that can find that balance will have a leg up in the post COVID landscape.

Safety, trust, and convenience will be areas that can not be overlooked. While many people are seeing the gradual opening up of business and retail stores as light at the end of the tunnel there are still many people who will still be apprehensive about venturing out. The safety of your employees and customers will need to continue to be a top priority. While people want to get out and shop and have social interaction, what that looks like instore has likely changed forever. Social distancing and limiting the number of people that can be in the store are likely here to stay.

As part of the safety and trust factor, how customers and employees interact with one another has seen a shift during the pandemic. Dividers or shields have been implemented at many retailers to keep employees and shoppers at a distance. This practice is likely to continue and evolve even more as retailers open back up. Contactless pay options have been around for a few years, however, brands will likely continue to evolve this technology and need to incorporate apps to their in-store experience.

While recent years have seen store pick up options accelerate and more and more companies providing this option, post-COVID 19 is only going to drive this retail option. The definition of shopping and going to a store is seeing a shift. No longer are stores going to be seen as a place to shop, it will be seen as a place to retrieve your products. Companies positioned to provide curbside pick up will likely see the benefits in revenue.

As measures are continued to be lifted, luring customers back will be of top priority for retailers. Safety and convenience will be key factors in getting people back in your store. However, another aspect that should be overlooked is discounts and incentives such as buy one get one free to drive customers to your brand. The quarantine and the stay at home orders have impacted many people financially. People are hesitant to spend money on non-essential items. Retailers could benefit from a creative strategy for sales and discounts to entice customers.

Communication is key, whether it is reaching your past customer or attracting new customers. Update your websites if you have one, send out emails, advertise through social media, tv, radio, newspaper, or any other avenue to make sure your message is out there and let people know you are open and ready for business. Also, be sure to tell your customers you are following all the local and state guidelines to open and that you are also taking the precautions needed to ensure everyone is safe and prevent further spread of the virus.

Many retailers will be looking for that one thing that puts them ahead of the rest as things begin to open back up. Providing extraordinary customer service could be a secret weapon. Bridging the gap between just an ordinary experience to an extraordinary shopping experience could be the piece of the puzzle that entices a past customer to return or creates the exact experience that the new customer was looking for. Creating that culture from within your organizations and then transferring that to the customer experience will create a winning customer experience.

With the shift to online shopping during the recent months and with things beginning to return to a new “normal” the retail landscape has been forever changed and how companies respond to this change will be crucial in coming out of this pandemic. Make sure as a retail company you are adapting and changing to meet the ever-changing needs of the consumer.

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We can credit the ancient Egyptians with inventing the mannequin. None other than King Tut himself owned a made-to-measure body double and his clothing, it is surmised, was designed and tailored on it. Mere mortals were not allowed to touch his body so the mannequin offered the ideal solution. It was clearly a prized possession and was found in Tut’s tomb, next to a chest containing the ruler’s clothing.

For centuries, mannequins were used only by very exclusive clothing designers retained by royalty. The figures were used to send the latest court styles to rulers in other countries. Over time, these forms were simplified, probably because heads not only rolled during the French Revolution at the Court of Versailles, but also in transit. By the late nineteenth century, mercantile stores began crafting life-sized dummies and effigies as the now more affluent middle classes demanded the same considerations as their ‘betters’.

Frank Baum, the writer known for his much loved “Wizard of Oz” children’s novels, got his start as a window dresser and used the medium to imagine and block story lines. In an interesting sidebar, religious organizations were horrified that many retailers dressed and undressed their mannequins IN THE WINDOWS. This led to a nationwide ruling that window dressing had to take place behind drapes or the figures had to be clothed at all times when on display. The laws remained in force until the 1960s.

Another industry growing pain surrounded the composition of the mannequins. Most were carved wood with a thick layer of wax applied and sculpted to resemble flesh. Heat was the forms’ enemy, and many met their end on a hot day. Paper mache forms followed, but these did not store well. Next came plaster, plastic and its variants. Never cheap, today’s mannequins are pricey. Entry-level mannequins are made of fiberglass, sometimes finished in plaster, and painted in varying fleshtones. These generally wholesale in multiples for under $200 each. High style mannequins such as those found in trendy boutiques or designers’ studios are molded from resin, and even lucite. Prices for these, and custom mannequins can reach over a thousand dollars per unit. But there is retail gold in them thar mannequins, so their initial cost is quickly realized in store sales and revenue.

Mannequins Tell A Story

Few of us have passed a store without stopping due to the alluring mannequin displays. They are designed to capture interest and invite shoppers inside. The most attractive window displays tell a story and may include a backdrop and additional props such as furniture to complete each scene. Graphic signage usually completes the tableaux and the story unfolded from window-to-window across the front of a retail store, with each window serving as a diorama. There is an art to this level of storytelling, and most visual merchandisers earn four-year bachelor’s degrees in this discipline. It takes creativity and talent to make eye-catching arrangements and the best visual merchandisers are in high demand. No matter who designs the display, the star of every show is always the mannequins.

Today there are about 250 mannequin manufacturers worldwide. Once available only as youthful men or women, many of these companies now make mannequins in every age, race, and form from infant, to seniors, maternity, and even plus size models. Every May industry reps gather in New York City to debut this season’s newest options for buyers in an event sponsored by the National Association for Display Industries (NADI). Mannequins, it would appear, are big business. The industry grosses about $2-billion annually. But fashion is not the the only purpose for the mannequin. They can help to save your life, too.

Extremely lifelike robotic medical mannequins are available as newborns to the elderly. These figures that simulate actual medical conditions are utilized in medical schools and hospitals to train doctors, nurses, and EMTs on new techniques as well as standard medical procedures. The cost of these training tool mannequins, also called ‘manikins’, ranges from the tens to hundreds of thousands; there is also a brisk secondary market worldwide. Mannequins lend themselves to the world of culture, too. They have been the subject of a major exhibit at the Metropolitan Museum of Art and frequently serve as the backdrop whenever a famed fashion or theatrical designer’s work is featured. Not everyone loves mannequins, however. Just like clowns, some people, especially those who have seen them stored in retailers’ back rooms minus their wigs and or limbs, find them creepy.

Mannequins are not relegated to in-store use. In fact, images of dressed mannequins are used by online retailers to display products on their websites. Mannequins remain the best display form for clothing and apparel to reach every age and demographic. As such they remain a popular display item today, as well as a highly-prized collectible. Some fashionistas arrange several in their homes to showcase https://www.revolve.com/!

In conclusion, throughout the ages, consumers have viewed the mannequin as an extension of themselves and have made their buying and other decisions based on these not always accurate but very flattering ‘mirror’-images. Today’s mannequins are high-style and high-priced to reflect the public’s conspicuous consumption of consumer goods. Love ’em or love to hate ’em, mannequins are a sales force that never calls in sick and doesn’t require use of a company car!

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At the end of the third quarter 2018, price conscious Walmart began to phase in over 125 luxury brands. You heard right, luxury brands sold at Walmart. While other industry giants such as Toys R Us and Sears folded or shuttered storefronts, Walmart has chosen a very unlikely path to find its way out of the economic quagmire. The chain, known for its low-priced merchandise and lower income clientele, has partnered with Lord and Taylor, a longtime luxury retailer. While each side of this relationship must be regarding the other with suspicion if not hostility, their individual survival might well depend on the reputation held by one another. Walmart is hoping to attract the well-heeled, while Lord and Taylor is seeking new customers for some of its more affordable upscale labels. After all, there is said to be strength in numbers, why not mix up the demographics as well?

Whether this shakey union will succeed long-term is unknown at this point. Upon closer examination, however, it is just crazy enough to work. What is the magic component? As always, compromise. Luxury retailers are losing foot traffic and their demographic, consumers over 55, may not be online shoppers. Also, as their target audience ages, there is less need for evening wear, gold, silver, and precious stone jewelry, and seasonal wardrobing. For retirees who become winter snowbirds, there is little need for warm outerwear. L&T wants to lure more middle-class shoppers to its website and brick and mortars. While their purchases per item may not be high, they still require year-round clothing and that prompts continuous online purchases, brings shoppers into stores, and makes cash registers ring.

Both Walmart and Lord & Taylor are having one hell of a year. In January, Walmart announced massive store closings and layoffs across the country, including at its warehouse, Sam’s Club. In October 2018, it was Lord & Taylor’s turn to eat humble pie. Up to 10 of its store nationwide will close by end of year. The kicker here is that these store closures include L & T’s fabled flagship store on Fifth Avenue in New York City. A Manhattan landmark for over 100 years, many insiders knew the chain was in trouble, but almost no one expected this. For both retailers who cater to consumers at opposite ends of the economic spectrum store closures generally precede filing for Chapter 11 protection.

To avoid bankruptcy and to turn this perilous situation around, decisive action had to be taken. But no one expected the white horse to be a retailer known for its starchy, nose-in-the-air-attitude, Lord & Taylor’s, nor the retailer founded in 1962 by a country hayseed. As for Walmart, Sam Walton might just approve their joint approach. While not a single Walmart standard has been sacrificed, nor a popular product discontinued, the inclusion of ‘something better’ will likely attract a new audience. Depending on how these new buyers rate their shopping experience will determine if they will become repeat customers.

The first stage has been to slowly introduce men’s women’s and kids’ clothing as well as footwear, accessories, and jewelry on Walmart’s website only- just in time for Christmas. Also, as if their quality alone was not enough of a differentiator, all 125 brands will appear under a separate category banner labelled, “Premium Brands” from Lord & Taylor”. Should these items sell briskly, the next step is to introduce some of the top sellers in select Walmart stores across the U.S. Each product description bears the legend, “sold and shipped by Lord & Taylor’s”. As you might expect, Lord and Taylor will receive a portion of each sale made on Walmart’s turf- online and down the road, in-store.
How Will This Alliance Work?

In case you were wondering, no Walmart merchandise will be sold either on the tony retailer’s website nor in any of its stores. While perhaps a small percentage will turn to this high-end retailers’ eponymous website or brick and mortars for special occasion clothing and better quality footwear, that is not the goal. The hope is that many existing Walmart stalwarts will make purchases from L & T’s exclusive category online, so that this category can be further expanded, and that both retailers will reap the rewards.

It is a simple enough theory that dates back centuries. The working classes are said to wonder how the other half (in this case the 1%) lives. By bringing carefully chosen brands such as L & T’s house brand, Vince Camuto, Lucky, Karl Lagerfeld, Democracy, Ivanka Trump, Calvin Klein, Miss Selfridge, Timberland, Brooks Brothers, and others not generally associated with Walmart, the brand is elevated without displacing its existing demographic. While it is not likely that stretch limos and Maserati will share Walmart’s parking lot with late model Hyundais and Ford Escapes, it is very likely that more affluent shoppers will visit the Walmart website and buy from other departments which include groceries, housewares, pet supplies, automotive, cosmetics and nutraceuticals, and even home decor.

Remember, the U.S. economy is not yet back to the level achieved in 2007. How affluence is defined differs now. Even for those who did not have to strictly budget their spending habits, nationwide and with an uncertain future, every household practices some degree of belt-tightening. For example, some households with incomes over $150K annually, now lease their luxury cars rather than buy them as they had previously. For many of us, online shopping has become a daily obsession, and hunting for the best prices is a new indoor sport.

As stated above, it is too soon to tell if this new alliance will succeed. For Black Friday, it was noted, that both Walmart and the Premium brands offered promotional pricing. Premium brands continued for the duration of the week that followed, hoping to influence shoppers’ buying decisions. If this scheme actually works, it could lead to some interesting pairings among retailers. If not, it was a chance, a financial risk well worth taking.

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