The Great Recession is Over, Sort of…
By Al McClain
While we seem to be past the worst of the Great Recession, for
now at least, we keep getting conflicting signals. For example, the Dow was
at its highest level in 17 months yesterday, while existing home sales declined
for the third straight month in February.
At the IRI Summit 2010 in San Antonio,
Dr. Romesh Wadhwani, chairman of the newly renamed SymphonyIRI Group, said
marketers can no longer take for granted that brands will be strong, price
increases will be possible, and promotions will be effective. He sees the next
few years as an age where consumers will be thrifty and affordability will
be an issue. He also said that convenience has been overtaken by value, as
the number of shopping trips taken in search of value was up by six percent
in 2009, with a similar increase predicted for 2010.
Meanwhile, the number
of stores visited per month has nearly doubled, according to Dr. Wadhwani,
and the percentage of shoppers making lists has grown from 50 percent to 83
percent over the past year. One interesting conclusion that Dr. Wadhwani draws
is that the “first
moment of truth” is no longer in the store but in the home, where shopping
lists are made.
So, what’s a marketer to do in this changing environment? Dr. Wadhwani
suggests the need to develop better consumer insights – faster – and integrate
their use throughout the organization. He says that companies have relied too
much on looking in the rear view mirror and that now they need to develop better
foresight, so they can respond to trends that are about to happen. Of course,
SymphonyIRI (a RetailWire sponsor) has tools to help manufacturers and
retailers do that.
Dr. Wadhwani cited as unexpected happenings for 2009 the
fact that low income boomer shoppers spent 12 percent more in 2009, while retirees
spent seven percent more. For 2010, he expects dollars per trip in 2010 to
be up three to five percent. He mentioned that manufacturers and retailers
who are able to develop the most granular insights the quickest will be best
able to detect trends like these in advance and be proactive in response.
also suggested that manufacturers focus more on consumers and shoppers, which
he says are the same people at different parts of the day, versus being brand
and category centric. Another idea is to think less about “share of wallet” and
focus more on “share of occasion,” such as sports weekends, holidays,
days of the week, etc. And, he advocates strategic segmentation of consumers
based on health stage, life stage, etc. Sooner rather than later, Dr. Wadhwani
sees targeted marketing getting down to the individual household level, or
at the very least down to a very small cluster of homes.
Other suggested changes
include renaming market research departments as business insights, or something
similar, because he feels the former name creates too much of a silo and ensures
that the information these departments produce will not be given proper attention.
Also, he suggested reallocating trade spend, diverting at least some portion
of resources away from store promotions into direct response, to reach consumers
when they are first organizing their shopping trips.
Do you feel that manufacturers and retailers are working fast enough on developing
foresight, as opposed to insights? How do you think the experience of living
through this recession has changed the ways manufacturers and retailers are
making use of business insights?
- Information Resources, Inc. to be Renamed
SymphonyIRI Group, Inc. Reflecting Its Innovation-led Expansion into New Value
Solutions and Offerings – SymphonyIRI Group, Inc.