Keep track of your customer’s bullish new wants

It’s moving ahead, mirroring results shown in the latest IPSOS Reuters Global Poll into consumer confidence. But, as yet, have all parts of Australian retail worked out what shoppers want?

This week, against this backdrop of good news, we had the chance to hear from four Australian/NZ retail leaders – first hand and in one venue.

At The Australian National Retailers Association inaugural Retail Nation luncheon in Sydney, Woolworths CEO Michael Luscombe, Coles CEO Ian Mcleod, David Jones CEO Mark McInnes and Bunnings COO Peter Davis all shared their views on the market: Where we’ve come from, where we are now and, importantly, where we are heading.

As directors of publicly quoted companies and key influencers of policy with government, all four chose their words carefully. They each delivered a balanced, though quietly confident, view of the path ahead. I won’t focus on the details of their interview with Ellen Fanning, as many capable writers have already done. I would, however, like to use the directors’ comments to take you along a shopper continuum that once again highlights our two-speed recession.

In Coles and Woolworths stores, things have remained good through the recession and are getting better. In Bunnings stores, things were just OK early in the recession and are improving. In David Jones stores, things were very bad before we even knew we had a recession and are now improving.

In the case of all three of these retail sectors, and all four of these retailers, considerable thought has been put into shifting the offer to align with shoppers’ fast-changing behaviour.

Remember, as individuals in our ‘working lives’ we have no control over what the shopper needs, we look for trends and react as quickly as we can. But as individuals in our ‘shopper lives’ we absolutely shape – and control – the direction of retailers and manufacturers.

So as we move along the shopper continuum from ‘needs’ to ‘wants’ and from ‘things for others’ to ‘things for me’ we shift our behaviour. How so? As things get tough, when we lose our jobs or fear losing our jobs, we develop a filter that allows us to block out non-core requirements and focus only on providing the best for our immediate family – however you define family.

We shift our purchase patterns to the ‘needs’ of others and ignore ‘wants’ for ourselves. We become less self involved, less selfish.

As quickly as possible, retailers and manufactures react to this change and start giving us more of what we’ve just begun to buy, whether that’s by product type, size, packaging, price or location. At the daily purchase end of the continuum this change happens very fast.

Grocers and packaged goods manufactures can re-profile, re-tool, re-price and react in weeks and months. The buying teams and the manufacturers around Luscombe and McLeod’s businesses have done just that. And as a result, the shopper experience is good, retail sales are up and manufacturer’s sales are up.

At a Retail Brand Health dinner in Auckland last month for my business, six senior manufacturers reported grocery sales up between five and 25%. The 25% growth was from an entrepreneurial new entrant that had quickly harnessed the shift towards high quality in-home dining and was fast reaping the rewards.

At the luxury end of the scale – clothing and fashion – things take a little longer, so other tactics come into play first. David Jones’ McInnes highlighted the swift way in which his wealthier shoppers stopped buying almost overnight when the global stock markets collapsed en masse in 2008.

He and his team very quickly liquidated their stocks in the same way as many of his shoppers were liquidating their share portfolios. Cut once, cut deep. Free up the cash to re-group, look for trends and then market to those trends.

The DJ’s year-end sale will be strong, and will be supported by more of the “stuff” that has been rushed to market to harness shifts in consumer spend. Less overtly conspicuous luxury brands, more high quality, discrete and classic luxury brands.

And as the ASX pushed through 4000 this week and proceed on to 4300 by end of June (as all of our super funds turn bullish), many of DJ’s shoppers will feel wealthier and start to again spend on themselves.

Make no mistake, by the time Christmas 2009 arrives, DJs and Bernie Brooks’ Myer will be busier than the ABC’s complaints hotline after an episode of The Chaser.

In his role as CEO of CROSSMARK, Kevin Moore looks at the world of retailing from grocery to pharmacy, bottle shops to car dealers, corner store to department stores. In this insightful blog, Kevin covers retail news, ideas, companies and emerging opportunities in Australia, NZ, the US and Europe. His international career in sales and marketing has seen him responsible for business in over 40 countries, which has earned him grey hair and a wealth of expertise in international retailers and brands. CROSSMARK Asia Pacific is Australasia’s largest provider of retail marketing services, consulting to and servicing some of Australasia’s biggest retailers and manufacturers.

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