Rodmell M Powered Era

Copyright watt international 2009

Success at Retail in the Post-Recession Economy

August 25, 2009

Patrick RodmellPresident + CEO

Watt [email protected]

Antony KarabusCEO

Karabus Management [email protected]

Paco UnderhillAuthor: “Why we Buy: the

Science of Shopping”[email protected]

An Overview of Watt International

Line of Business: Retail Consulting, Branding, Marketing + Design

Brand Position: Building Brands. Building Business.

Brand Pillars: Collaboration. Inspiration. Innovation. Vision.

USP:

• Understanding how to motivate consumers

• Global authority in retail

• Left/Right Brain Solutions

research +

insight

research +

insight

brandingbranding

marketing +

design

marketing +

design

strategy +

consulting

strategy +

consulting

Consulting practicesConsulting practices Creative AgenciesCreative Agencies

We work internationally with retailers and product companies to help maximize their brand potential.

“(watt international is) a unique group of talent people, encouraged to think beyond their specialty”…

1. Recession – Key insights

2. The M-Powered Era

3. How to win at retail in the M-Powered Era

4. Al least one new idea to take home with you

Reality Check:

The recession that began in December 2007 is close to an end, and will have lasted 21 or 22 months, making it the longest downturn since the Great Depression.

Source: National Bureau of Economic Research and The New York Times

EMPLOYMENT:US unemployment rates are approaching 30 year highs…

EMPLOYMENT:…and the trend vs. other recent recessions is concerning

Source; Federal Catherine Rampell, The New York Times; April 3, 2009

Job loses in recent recessions, as share of employment

Source; Bloomberg; July 14, 2009

RETAIL SALES:US Retail Sales show a pretty gloomy picture

5%

0

(5%)

(10%)2007 2008 2009

RETAIL SALES:…and the Retail Sales Index presents an alarming trend

Source: St.Louis Federal Reserve Bank

US Retail Vacancy levels paint a bleak picture for retailers, landlords, governments…

Source: Marcus & Millcap Research Services

9%

8%

7%

6%04 05 06 07 08 09

2009 Q1 = 9%

1. One-third of consumers have made “substantial” cutbacks in dining out, driving and everyday shopping. (Source; Booz & Co.)

2. 42% of Canadians are planning to take more "staycations" in the upcoming year.(Source; Booz & Co.)

3. 84% of consumers who are cutting back on their spending believe that prices have recently increased - price perception is likely to be an increasingly important issue.

4. 8 out of 10 women have changed the way they shop for apparel, and are changing where they shop and switching to less expensive brands. “These trends are likely to last beyond the recession.” (source; Retail Forward)

5. 53% of consumers are still willing to pay for eco-friendly products in this recession.

CONSUMER ATTITUDES:The Recession-era Consumer

Consumer behaviour and the retail landscape are going to change dramatically in the post-recession era.

But don’t blame the recession.

The recession is simply accelerating changes that were already underway due to other factors;-Too many stores and product options

-Shrinking middle class

-Concern for our environment

- Access to information anytime, anywhere.

CONCLUSION:

The customer is Mobile, Empowered, and fully in charge


The end of the “Abundance Era”; the beginning of

The M-Powered GenerationThe M-Powered Generation

• Born +- 1988: The coming consumer generation• Don’t know life without the internet• Short attention spans• Don’t trust advertising – look to their social network.

Source: McGraw-Hill Research Source: McGraw-Hill Research

Revenue Growth % over first five years after the recession

Companies that maintained sales and marketing efforts

during the recession

Companies that cut sales and marketing efforts during the recession

275%

19%

This doesn’t mean you should stop promoting your brand

The M-Powered GenerationThe M-Powered Generation

• Mobile technology is a commodity• Sensitive to our environment• Developing their consumer DNA during the global recession.

• Born +- 1990: The coming consumer generation• Don’t know life without the internet• Short attention spans• Don’t trust advertising – look to their social network

CONSUMER ATTITUDES:Being “M-Powered” is a fundamental necessity

Source: Morgan Stanley

Winning at Retail in the M-Powered Era

• Consideration for the environment will be mandatory


• “Choice” is a stress word - skus will be rationalized; stores will shrink – what will you do with the extra space?


Walmart’s Project Impact:15% less skus (optimal sku selection)

Merchandise($/sq. foot)

Experience(Customer satisfaction)

vs.

What can you do that will enhance the experience and build loyalty with your

customers?


• “Choice” is a stress word - skus will be rationalized; stores will shrink

• Consumers will be less brand loyal and more motivated by “Value” – disposable is out; durable is in


Insert image here

Authenticity

Today’s consumer is skeptical about marketing messages, looking for products and experiences that have a closer connection with a true human element.

Being “Authentic” is a core brand value that is key to capturing consumer mindshare.




• Embrace Consumer and Shopper-centric thinking


Developing product and packaging solutions with an understanding of how a consumer interacts with your product while they are “consuming” it

““Consumer-centric” defined:Consumer-centric” defined:

1. Who gets blamed when it doesn’t get cooked right?

Managing freshness: making sure it’s Ripe!

10. …but Clorets perfected it!

Developing brand propositions, packaging, merchandising and store experiences with an understanding of what the customer is doing and thinking while they are “shopping”

““Shopper-centric” defined:Shopper-centric” defined:

This is soooo 1980s…

4. Because when the lights go down, ‘red’ can look ‘pink’ (or so I’m told).

3. At Hollister, the customer sets the tone…and stays until they hear it!

Thinking laterally about the mindset of your customer

The “Value Guru”Helping shoppers maximize value for money in the store.

Where does the customer experience begin and end?

Shopper insights = The Store as a Medium




• The winners at retail will be those who embrace Consumer and Shopper-centric thinking

• The winners at retail will have integrated strategies


Marketing Store Design Merchandising Operations

Insights

Strategy

A place that sells stuff

Insights Insights Insights

Strategy Strategy Strategy

What we see today

Marketing Store Design Merchandising Operations

Insights

Strategy

Customer loyalty

An integrated, well-oiled customer experience

What should be

Tactics

Brand Strategy

Our Philosophy

BusinessStrategy

Marketing Advertising , Website, Brochures, Catalogues,

Flyers, In-store signage

HRRecruitment/Retention Training Incentives & Rewards

Business PlanningStore FormatsStore OperationsPrice ProgramsStrategic Partnerships

OfferingNational brands Private label Services

BrandName, IdentityColors, FontsInternal Communications

Public RelationsSponsorships EventsLaunches

EnvironmentArchitecture Décor Layout






• The winners will look for Competitive Edge; NOT Bleeding Edge.


Virtual Post-it NotesUsing GPS technology, retailers and brands can leave text messages for consumers at a specific location, at a specified point in time.

Technology with Competitive EdgeTechnology with Competitive Edge

QR CodesTake a picture of the code; get special promotions

Technology with Competitive EdgeTechnology with Competitive Edge


• “Choice” is a stress word - skus will be rationalized; stores will shrink – enhance the experience with the extra space




• The winners will look for Competitive Edge; NOT Bleeding Edge


Who’s calling the shots?

The places we buy themThe brands/products we buy

The Customer!

Brand V =Reality

Expectationalue


Thanks for Joining us Today!

[email protected]

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