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Consumers Demand Service
Though not every individual has the characteristics and desires attributed to particular generational molds, some basic marketing and promotion strategies appeal to all consumers. We all live in the same world and encounter similar challenges. Convenience will continue to be an issue and new product concepts must consider how they provide “convenient consumer solutions.”

ACNielsen research points to portability, preparation ease and preparation time as being key opportunities. Retailers can win with convenient solutions. Recently, Progressive Grocer published an article about how Publix, Albertson’s and Target are offering recipe ideas and shopping/cooking tips for customers who don’t want to eat from a salad bar, but who don’t have time to prepare a meal from start to finish.

Health and wellness is another cross-generational marketing message that’s here to stay. ACNielsen research points to organics, functional foods, elimination of trans fats and whole grain breads and pastas as being hot categories. Also, in-store health clinics at retail are growing in importance.

Rising fuel costs are also affecting marketing and promotion. Value pricing is more important than ever with trip capture (consumers don’t want to drive any more than they have to) becoming paramount. At-home meals and entertaining will also become more prevalent.

WSL Strategic Retail charts the evolution of consumer shopping habits with its How America Shops studies. Their 2006 report presented the responses of 950 men and women from across the country who took as survey last November. Since it took place right after Hurricane Katrina, key questions were repeated in February 2006.

The survey responses resulted in an overall profile of the American consumer. WSL analysts say that the consumer’s mind-set has dramatically shifted since 2001 and reflects a new “Never Normal” environment in which they now live. As a result, they are anxious, cautious, calculatingly price-conscious consumers who have reduced spending across most key indicator categories. This study illustrates that the landscape is primed for a retailer who is focused on service. The retail landscape has reached a state of total saturation, and service has reemerged as a leading consumer demand and loyalty driver.

“Post 9/11, consumers found themselves in a “New Normal” retail landscape, as we reported in How America Shops 2004, but today, they reel in a “Never Normal” world rife with unrelenting shocks that range from corporate scandals, war and tsunamis, to Katrina, see-sawing oil prices and who knows what comes next. They anxiously wait for whatever may come next and shop accordingly,” said Wendy Liebmann, WSL Strategic Retail founder and principal.

Women reduced spending across six “Key Expenditure Categories” (Shopping, Savings and Investment, Education, Leisure Travel, Entertainment, and On Myself) by a net average of minus 17 points, reported How America Shops 2006. While “Shopping” was the sole category to show a net spending increase (plus 6), these purchases were on necessities, including food, medicine and pets, while spending fell sharply for discretionary categories like cosmetics, fragrance and home décor.

Of 14 “Leading Indicator Categories” surveyed, only pet supplies (plus 19), food (plus 18) and prescription medications (plus 18) showed substantial net increases in spending over the previous year.

“There were dramatic declines in everything from cosmetics to computers. This isn’t necessarily about using less or doing without,” noted WSL principal Candace Corlett. “Rather, it’s about smart shoppers buying at the lowest price, traveling further to save money, and trading down to lower-priced brands.
The study also demonstrates that the important element to shoppers today is “service with respect.”

“Service with respect has become the foundation on which store loyalty stands,” continued Corlett. “Women want bargains, to accomplish a lot in one trip, and interesting items, but if the level of service and respect is found wanting, none of that matters.”

Talking ’Bout My . . .
I don’t know about the rest of you, but for those of us born in the 10-year period following the Baby Boom, I’d like to say one thing . . . what about us?

This generation, those who were born between 1965 and 1977, is often overlooked. But alas, we’re now hitting (dare I say) middle age or at least we’re turning 40. And apparently, we’ve gotten the attention of marketers because (some of) our wallets have also improved with age.

Today’s affluent market is dominated by two generations at two different life stages. These two generations represent the core target market for luxury marketers. Some 55 percent of the affluent consumer households are headed by Baby Boomers, aged 42 to 60, who are approaching or already in their empty-nesting life stage. About 25 percent of the affluent market are GenXers, aged 30 to 41, who are in the family-formation and young children at home life stage.

Given their different life stages, these two generations demonstrate different luxury shopping behavior, with the GenXer affluent households spending more money on average buying luxuries than the typical Baby Boomer. As a result, luxury marketers must understand the two different generations in order to target their marketing communications, advertising and product development efforts effectively.

According to Unity Marketing, luxury consumers of the GenX generation spent 6.3 percent more on luxury purchases than their affluent Baby Boomer counterparts in 2005. GenXer households averaged $52,781 as compared with the Boomers average of $49,672. The biggest spending gap was in the home luxury goods category, where GenXers spent 28 percent more than Boomers on average.

“While Boomers still spend lots of money on luxuries, luxury goods marketers are going to find the younger GenXer affluent consumers a more important part of their target market in the coming years,” said Pam Danziger, president of Unity Marketing. “After years of catering to the Boomers’ luxury appetites, luxury goods marketers need to tap the tremendous spending potential of GenXers. Because they are younger and more recently affluent, they are acquiring luxuries for the first time that Boomers already own. As Baby Boomers downscale their lives, GenXers are at a more materialistic life stage and so marketers of home luxuries, such as kitchen appliances, furniture, electronics, art and tabletop, and personal luxuries, like fashion and fashion accessories, jewelry and beauty products, need to become attuned to the emerging desires and shopping habits of this younger luxury generation.”

Boomer Babies
Unity Marketing also reports that social psychologists are heralding the emergence of a distinct life stage. The period between 18 and 26 is now being repackaged as “youthhood” or “adultescence.” Legally adults but not quite grown up, they are being called “Twixters.”

Twixters find themselves in a transitional period between youthful frivolity and mature accountability. Many are delaying adult responsibilities, such as commitment to careers and settling down. They job hop, forestall marriage and extend education. For example, since 1970, the percentage of 26 year olds living at home has swelled from 11 percent to 20 percent.

However, observers have failed to examine the innate psychic links between Twixters and their trail-blazing Boomer parents. In fact, Boomers were the first generation to forestall adulthood.

When Boomers slammed into their early twenties, they confronted titanic political and cultural conflicts. The Vietnam War, liberation movements and a bellicose society convinced many to drop out of school and wait to have children. Further, generational size and competitiveness hindered rapid movement into adulthood. Beginning career jobs became more difficult to find as the 1970’s unfolded. Spurious interest rates caused housing to become nearly unaffordable.

Moreover, Boomer parents are exerting an influence on twixters because of their shared values, particularly passion and idealism. Like their fervent, protest-marching parents, Twixters want more from life than a paycheck. They are earnest about self-actualization. They yearn to make the right choices early in life and then change the world. This group also requires a certain marketing style.
“Younger generations have a tendency to not shop grocery and drug to the same degree as boomers,” explained ACNeilsen’s Todd Hale, senior vice president of Consumer & Shopping Insights. “They are more likely to shop a supercenter and more into retailers like Target and WalMart. They’re attracted to these stores because of the advertising; these retailers are appealing directly to this younger consumer. There is an opportunity for retailers to advertise differently to reach those generations.”

Hale illustrates the change in shopping habits by pointing to stores such as Whole Foods in Portland, Ore., where the store exudes a vibrancy late at night.

“If you look around the store, you notice that it looks like a place that people are going to for social activities rather than just shopping,” Hale said. “It’s retail-tainment. They have better-quality prepared foods to reach younger shoppers. Whole Foods is winning with this demographic because they understand how to reach this segment.”

The Elders
Taking current spending levels and projecting to the future, the 55-plus households will drive 31 percent of all-outlet spending in 2015 and 34 percent in 2030. Clearly “Seniors” comprise a growing marketing segment with a lot of shopping power. But we don’t have to wait for the Boomers to turn 65 before we begin taking advantage of these readily available consumers who were born in 1945 or earlier.

ACNielsen research illustrates another demographic age bracket referred to as The Elders. This group is one that loves to shop, and they have the time to do it often.

“The 65-plus generation are people who love to shop. They have a lot more time on their hands. My 82-year-old grandmother shops all the time — the only thing she won’t do is make a left-hand turn,” Hale joked. “This is a demographic that finds value in grocery and drug stores, and they are also responding to the supercenter as a value shopping choice.”

The only difference in the habits of this consumer, Hale said, is the days on which they like to shop. While most consumers shop on the weekend, particularly Sunday, seniors are least likely to shop on Sundays.

“Income plays a big part in determining where consumers shop. Specialty stores are the more prevalent shopping choice for more affluent consumers, as well as those in more urban settings,” Hale said. “Generally speaking, the specialty grocery store — The Byerly’s, Lunds, Wegmans — consumer is an upper-income household. They are also frequented more by empty nesters or childless couples. When you have a couple without kids, you find them more likely to be shopping in the more specialty stores. And then they have kids and they realize how much they are spending and they shift to the mass merchants or mainline grocery stores.”

Melting Pot
Outside of key age demographics, ethnic consumers are perhaps the largest driver of consumer marketing messages for retail across the country. Today, Latinos, African-Americans and Asians comprise a third of the U.S. population and pump over $1.8 trillion into the economy.

Esther Novak, founder and CEO of VanguardComm, explained that marketing to ethnic populations takes the same directive as with any other consumer group . . . retailers need to know their customer and their needs.

“It boils down to the very basics — you have to know your customer,” she began. “You have to know the language they prefer to speak, the foods that are familiar to them, recipes from their grandmothers and their home country, etc. The inventory in the store needs to be relevant to the ethnic communities in the area.”

Ethnic marketing involves understanding common core behaviors and values. Novak points out that tradition, respect for elderly, celebrations, faith, family and the connection to home country is a key to understanding.

“Just as language and music is very specific to a culture, the food is also very specific. Mass merchants such as Sears and Wal-Mart have come to understand that you need to have colors, sizes and styles that appeal to the consumers you want to reach. In terms of food, it’s self-evident that Latin Americans like spicy foods. Even if they are born in the U.S. and highly acculturated, there are very traditional meals they will remember from their youth. And if the retailer is in an area where there are a lot of new arrivals, there has to be information in both languages to provide information and answer questions. Being inclusive conveys the invitation to come into the store.”

The Unilever Hispanic Shopping Trip Study focused on four of the largest Hispanic markets in the U.S. — Houston, Los Angeles, Miami and New York. Seven hundred ninety-nine participants participated and nearly nine out of every 10 respondents were born outside of the U.S., either in Mexico, Central or South America or the Caribbean.

The study revealed that because food plays such a dominant role in a Hispanic woman’s life, all shopping activities are highly planned.

“From family to community, food for Hispanic-Americans has an emotional and cultural significance that extends beyond eating. Hence, the Hispanic shopper thinks about every aspect of food shopping and preparation,” added Mike Twitty, senior group research manager, Shopper Insight, Unilever United States. “She plans her trips carefully — apparently more so than the general market shopper — and not only around what she has at home and what she needs, but around the value she can obtain.”

Although much has been said about how different Hispanic shoppers are from each other depending on their countries of origin, this study points out that while they may be different in the foods they want, they’re the same in their shopping behavior. This includes the frequency and type of shopping trips they take.

Routine trips are not characterized by any specific item; Hispanic shoppers have different routines for different product categories, but they frequent stores where they find the convenience and service appealing.

The study also warns that the Hispanic consumer is a highly food-involved, smart, efficient and value-oriented shopper, one that retailers ignore at their own peril.

A report in The Arizona Republic in April illustrates the battle among grocery stores to attract Latino consumers. Many new stores now come with full-service restaurants or delis, larger bakeries, meat markets and produce sections. Some also offer services such as travel agents and money transfers.
”They have appealed through an improved quality of store, more merchandise, bilingual orientation and paid attention to the nostalgia market with products made in Mexico,” said Earl de Berge, research director at the public opinion and market research firm Behavior Research Center. At the same time, he said they are very aware that this market is experimental and consumers are looking to try products of their new country.

Phoenix Ranch Market opened its first store five years ago in south Phoenix, Ariz. Since then, the Ontario, Calif.-based chain has opened four more and is building its fifth store at 33rd Avenue and Indian School Road. The new store will be 60,000 square feet and is moving into a shell left by an electronics retailer. The grocer will lease 45,000 to 50,000 square feet to other tenants.

The store's loud music, freshly squeezed drinks and restaurant service take it beyond the traditional grocery store, and it’s become the norm for most big-box grocery stores that cater to the Latino market.

The competition has not gone unnoticed by chains serving the broader market, such as Kroger Co., which owns Fry’s Food Stores, and Wal-Mart. Both have done more merchandising of products aimed at Hispanic consumers. Fry’s, for instance, has experimented with more products aimed at its predominantly Latino customers.

In Florida, Publix rolled out two of its Latin-focused Sabor stores last year.
Understanding what ethnic population, as well as how age and income play a roll in your market will help you not only design advertising messages, but help determine product mix, signage, and promotional events in your stores. Attracting an older consumer to the store might require afternoon sales events on Mondays or Tuesdays. You might schedule late-night social events for 20-somethings, singles cooking classes, or Girls’ Night Out.

Understanding the demographics of consumers who live in your area, not only those who already shop your store, will help you build a strong and healthy business. Successful retailers will use this knowledge to target growth through advertising, merchandising and promotional activities.

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The Latin Shopping Trip
To provide a new perspective on the needs and expectations of the nation’s fastest-growing grocery market, the Unilever Hispanic Shopping Trip Study applied retail growth lessons learned from the 2005 Unilever Trip Management Report, which examined general market consumer behavior.
Key findings include:
• The Hispanic shopper makes a higher number of bigger trips, Fill-In and Major Stock-Up, and far fewer Quick Trips than the general market consumer.
• Quick Trips are just 44 percent of all trips she makes verses 62 percent for general market shoppers. Non-food items drive Quick Trips for the Hispanic Shopper.
• Hispanic women are significantly more aware (by a 48% to 36% margin) of “specials” before going to the store than are general market shoppers. Even within the store, Hispanics’ awareness of specials is higher than the general markets.
• Nearly one in four Hispanic shoppers walk or take public transportation (22%) compared to just one in 33 of general market consumers. Geography is responsible for choice, as is value.
• She knows her needs beforehand; hence, a full 56 percent of her trips are routine verses 26 percent in the general market.
• The Hispanic shopper may spend less per routine trip, but a full 54 percent of her total grocery spending occurs on routine trips versus 22 percent in the general market.
• Even more dramatic, only two percent of her trips are urgent, versus 19 percent for the general market — that’s one in 50 compared to one in five.
• More than half surveyed use cash, one quarter used a debit card and 11 percent paid with a credit card. Only two percent paid by check.
• 35 percent of all Hispanic shopping trips occur after 6 p.m. compared to only 18 percent in the general market.
• Hispanic shoppers are shopping with someone else — most frequently with kids — on 29 percent of all trips, compared to 23 percent in the general market.
• They’re nearly twice as likely to be shopping with a non-family member, such as a friend, than is the general market.