Society Continues to Fragment: The Consumer in 2010

Discussion
Jun 01, 2005
Al McClain

By Al McClain


If you’ve ever stood in front of the toothpaste section marveling at choices, or killed an hour scanning the available channels on your TV, it’s easy to think that all consumer segments and choices are already met. Not so, according to Lois Huff, senior vice president of Retail Forward, who spoke at their recent Retailing 2010 conference.


According to Retail Forward, society will continue to segment into sharply-defined, well-connected, and highly-motivated consumer niches that will no longer be satisfied with universal access to high quality, undifferentiated products. One aspect of this is that with Internet-based connections permeating much of daily life, consumers expect to be able to find what they want, when they want it. And, with increased connectivity, niche interest groups that might never have assembled before are getting together and will effect societal change. This also leads to more extreme and intractable perspectives among these ever-finer niches, which are less willing to consider opinions of non-group members.


As access to cheaper, high quality, more commoditized products increase, retailers and suppliers will have to provide tangible benefits to consumers – “what it does for me.”


Consumer expectations will be that most products are high quality and functional, so to stand out manufacturers will have to show tangible benefits that relate to individual consumers and these niche groups. Consumers will have a harder time expressing their individuality, so they’ll want products that help them do this. Suppliers will need to increasingly target extremely narrow niches.


We’ll also need to understand the aspirations of various age and demographic groups, deal with contradictions, enable consumers to achieve more privilege and exclusivity, and help consumers find high style, which is one way to provide differentiation and command a price premium. Consumers will want more participation and interactivity, which may mean trying new ways to get consumers to try new products, both in-store, and by bringing products to where consumers are. And, “co-creation” or getting consumers involved in actual design of products, stores, marketing, and experiences will be important.


Moderator’s Comment: What missed opportunities are there for suppliers and retailers to better connect with consumers?


Marketing campaigns often stimulate consumers’ desires for products but by the time the “rubber meets the road” in-store or on location, the consumer expectation
is not met as it should be, decreasing sales and repeat business. When is the last time a vacation or shopping experience was as good as it looked in the TV commercial?


This weekend, I was in a brand new Wal-Mart Supercenter, within 20 miles of their headquarters. The store has been open only about 10 days. The enormous
store was clean, the produce looked great, and the prices were low, as “always.” The only two things it seems they haven’t focused on are 1) how to personalize the shopping experience
and connect with consumers, beyond the standard greeter and Wal-Mart TV; 2) How to sell high-end goods. For the moment, there is an opportunity for others, while Wal-Mart and
other top retailers seem to be still focused on EDLP and supply chain efficiency, to form deeper and stronger connections with shoppers, and offer products with more personalized
features.

Al McClain – Moderator

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9 Comments on "Society Continues to Fragment: The Consumer in 2010"


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Bernice Hurst
Guest
15 years 8 months ago

Doesn’t anyone else out there see the inherent contradiction between the introduction and the question? If customers want to be different and have a perception of exclusivity, how can retailers possibly expect to sell mass produced merchandise? For those customers, the growth area will be in independents. Chain stores will only survive by continuing to sell cheap products to people whose purchasing decisions are based primarily on price and who care more about what they get than how they are served. That is, the mass market stuff that can only be sold cheaply by being produced in massive quantities. There are too many different categories of shopper for retailers to forge connections with them all. It is far more important to recognise the audience you are attracting and meet their needs rather than aiming at the ones you are unlikely to tempt. No single retailer can satisfy all customer requirements.

M. Jericho Banks PhD
Guest
M. Jericho Banks PhD
15 years 8 months ago

Popular retail wisdom is predisposed to move in the direction of selling to customers one at a time. Eventually, though, this suffers from the law of diminishing returns. We seem to run into that law, rebound from it, and then try again with similarly self-limiting results. It’s a cycle, and many consultants prosper from participating in it.

But, customers generally don’t want better connections from retailers. They use stores when they want to buy something, and want to be left alone afterwards. Retailers rarely become “part of my life.” However, when someone is ready to buy, they want to initiate successful connections to one or more retailers. The most successful connections are shopper to retailer, not retailer to shopper. So, retailers, look for ways to make yourself more accessible.

Gaurav Gupta
Guest
Gaurav Gupta
15 years 8 months ago

The article makes a marketer think. The age old principle of where you want your brand to be and how to best make use of available opportunity lies in how much you can access – in terms of resources and consumers. Even in a fragmented consumer base there will be common values, culture, needs that may be used for marketing. The pressures are on retailers for the consumer groups they attract – the manufacturers’ brands may be omnipresent. There is an opportunity cost involved; boiling down to whom you want to target to get you those desired sales and volume figures.

Carol Spieckerman
Guest
15 years 8 months ago

I tend to agree with Peter. Why always assume that ALL consumers WANT customization, attention, and personalization? There are plenty of retail concepts that thrive by creating a flea market, treasure-hunt environment intentionally (dollar stores, Ross, TJ Maxx, Tuesday Morning and, arguably, Wal-Mart). Cultural changes in the U.S. support these concepts. Some customers undoubtedly do want a more personalized experience and they can get a fix via the internet and specialty shopping experiences (probably supplemented by commodity trips to mass retailers!). I think the real trend won’t be an en masse movement to any one model but rather a proliferation of choices that will have customers cross-shopping and channel surfing as never before.

Michael Richmond, Ph.D.
Guest
Michael Richmond, Ph.D.
15 years 8 months ago

As they should say in the new “The Graduate” movie – “Packaging, Ben.” Packaging will be the key going forward. I have been talking for more than a year about consumer fragmentation and the importance of packaging on RetailWire and I am glad to see more signs supporting the importance, value and opportunity for packaging. It really is that simple. Packaging can help deliver better product performance (real and/or perceived), enhanced convenience and greater shelf impact. Another best practice that will help retailers is the Campbell’s shelf organizer for soup. Store managers and consumers love it based on a variety of audits and consumer research we have completed. One word – packaging!

Peter Fader
Guest
15 years 8 months ago

I don’t see any hard evidence that the retail world will become highly “nichified,” as the quote above suggests. Big brands will still dominate most markets, and there will be a “long tail” of small brands that fill occasional gaps.

Pundits were painting this same scenario when the Dot Com revolution started about ten years ago, but most markets today (online and offline) show the same basic structure as always.

There’s only so much need for highly personalized shopping experiences. Most people are perfectly content to buy the same old stuff they’ve always bought, which is the same stuff that many other people buy as well.

Mass marketing still rules!

Santiago Vega
Guest
Santiago Vega
15 years 8 months ago

There are definitely missed opportunities, especially on the part of big-box retailers, to connect with their customers, because they have shifted their focus and priorities from the all-important MERCHANDISING to other segments of the business, such as supply chain management.

At the end of the day, it won’t matter if you have your product on time and in stock if it’s not the product that the customer wants. With the recent consolidation of the retail landscape and their efforts to cut costs and merge their cultures and operations, we can expect savvy and distinctive independents to better cater to niche groups and stand out from the ordinary.

Gene Hoffman
Guest
Gene Hoffman
15 years 8 months ago

As the consuming marketplace continues to fragment and the on-line and niche worlds become more potent, manufacturers and retailers will concentrate on trying to specially-appeal to the individual wants of each consumer. That will revise to some extent the efficiency paradigm between the current supply chain and the forthcoming consumer-focused chain.

A new reality is apt to set in with the increased proliferation of specially-designed items as the cost to both produce and accommodate them will rise. This could create a challenge for consumers: “Will I pay more for ‘my’ product or service or buy a ‘nearly-as-personal’ one that is available somewhere for less money?” Thus we could be led into a changing world where Wal-Mart and the niche retailers collide … or possibly combine. Thus suggesting that the future will be worth watching.

Karen Kingsley
Guest
Karen Kingsley
15 years 8 months ago

Oh my gosh – where to begin? As Al points out in his comments, retailers are missing millions of opportunities every single day to connect to consumers. Except for the few independents able to stand up to EDLP, there is very little product differentiation from store to store and no customer service.

Particularly with the advancement of broadband internet connections, consumers will find it increasingly easy to shop online, which facilitates the growth of independents because there is so little cost of entry. Technology also allows for tremendous personalization of communication between seller and buyer.

Brick and mortar retailers need to pay attention to the online world and look carefully at the ways in which they are able to connect with consumers. It is my heartfelt belief that in the next decade the retail landscape will change dramatically in response to the numbing sameness and ineffectiveness of retailers to connect.

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