What Can a Dead Armadillo Teach Retailers?

Discussion
Mar 17, 2005
George Anderson

By George Anderson

As America’s self-proclaimed #1 populist, former two-time Texas Agriculture Commissioner, author and radio personality Jim Hightower has said, “There’s nothing in the middle of the road but yellow stripes and dead armadillos.”

Mr. Hightower’s observations about the perils of getting stuck between oncoming traffic offers lessons for the retail industry. Those operating in one lane (the high end/luxury market) have done well, while those in the other (price/value segment) have also prospered. As for those businesses that tried to stake out a middle position: let’s just say that the industry has seen more than its fair share of flattened armadillos in recent years.

According to Roger Blackwell, professor of marketing at Ohio State’s Fisher College of Business, higher prices at the pump and higher heating bills are pushing consumers across income segments to shop for the best price on everyday items.

“How do rich people get rich? It’s not from spending their money unwisely,” he told The Daily Reporter.

At the same time that they are bargain hunting on one end, consumers are also willing to trade up in other areas as a means of personal reward, according to Prof. Blackwell. For one shopper, this could mean a stop at Starbucks. For another, it could mean buying a Prada handbag, etc.

Moderator’s Comment: Is there a middle way in which retailers can be successful or does the market demand merchants to stake out a position on either
the price/value or luxury segments of the business?

Ellen Tolley, director of media relations for the National Retail Federation told The Daily Reporter, “There is room for a variety of retailers in
the market. Some retailers are more successful than others, but that is because they pay more attention to what their customers want and they make sure to give it to them.”

Prof. Blackwell pointed to Big Bear as a grocery chain in Ohio that couldn’t compete on price with the likes of Aldi and Wal-Mart and didn’t create an identity
around other areas of the business that would have appealed to consumers. The result was bankruptcy.

George Anderson – Moderator

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12 Comments on "What Can a Dead Armadillo Teach Retailers?"


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Mark Burr
Guest
15 years 11 months ago

The greatest example of what could be described as a successful (greatly successful) middle retailer is Target. I know of no other that does any better at what is mentioned by many today, that is, knowing your customer.

Stephan Kouzomis
Guest
Stephan Kouzomis
15 years 11 months ago

Target has done a masterful image building campaign, by offering what shoppers want and will pay a little more for; and still offer traffic builders.

Convenience, service, quality in products, and the perceived value has put Target slightly above the middle, and in between the low end price and mid to high end department stores.

Is Penney’s reinventing itself, between Sears and Kmart or Wal-Mart with its hip fashions and advertising campaign? Looks like it.

There is middle ground when you research the shopper, keep the focus on them (and not the total market) and advertise the story they want to hear. Hmmmmmm

Bernice Hurst
Guest
15 years 11 months ago

Gene may not have been penning one of his poems today but his choice of words said it all – exciting, dynamic and responded. If a retailer is the first two, consumers will do third.

Jerry Gelsomino
Guest
15 years 11 months ago

The biggest problem with being in the middle of anything is that it is too easy to jump left or right a half a step, which could put you staring straight on to a semi. If you make a small move to pick up the value customer today, and make another small move to interest the high end customer tomorrow, you confuse that shopper and they lose all confidence that you know who you are.

Glad to see someone else like Trader Joe’s ’cause I talk about them all the time. What a unique store. Now what do you think they would look like if they were an apparel retailer?

M. Jericho Banks PhD
Guest
M. Jericho Banks PhD
15 years 11 months ago

In Texas, some call dead armadillos “gourmet-dillos.” In other words, it all depends on what you make of them. Stew or frappe?

Customers can lead you if you let them. Some like stew, others don’t. If you listen carefully and observe wisely, they’ll lead you from the middle of the road to a place they prefer. To retailers today, meaningful research consists of watching competitors’ critical numbers. That’s not research, it’s fretting.

The “middle way” can be self-defining. In other words, entering this marketing area with pre-determined conclusions – like all the weary lists many of us offer – is just another me-too approach like everyone else’s.

Listen, and you may grow to appreciate the armadillo.

Andrew Casey
Guest
Andrew Casey
15 years 11 months ago
The essence of successful retailing is to be different from your competition. If there is little difference between stores/competitors, why would anyone ever favor one over another? The corollary is that being different guarantees there will be customers who don’t like what you are doing and won’t do business with you. But if you do your homework correctly, there will also be those who won’t go anywhere else. Wal-Mart embraced this philosophy by laying claim to the low price segment. Say the words “low prices” to 100 people and you can bet 90+ will say “Wal-Mart” in reply. Consumers know what WM is and, just as importantly, so do the people who work there. Everything they do is focused solely on projecting and reinforcing a low price image. Competitors cannot be successful if they allow Wal-Mart to define the basis of competition on their terms (price). Many large, particularly the unionized, chains have let WM paint them as “high priced” in consumers’ minds rather than focusing consumers’ attention on the shopping experience or customer service… Read more »
Ken Wyker
Guest
15 years 11 months ago
It’s ridiculous to think that you have to occupy one of the extremes to survive. Working with the road analogy, the road that retailers travel has many lanes, and each retailer needs to select the one that works best for them. The slow (low price) lane has a lot of traffic, but right now it is dominated by Wal-Mart’s trucks. Even if they don’t run you over, you’ll be going so slowly that you won’t get anywhere fast. The fast lane (high end) looks promising, but requires a quality engine with enough horsepower to keep up. If that’s not how you are built, you’re not going have much success. Somewhere in the middle lanes is a mix of price, quality, convenience, customer service, etc. where most retailers can successfully run their business. They key is to focus on what you are and not worry about what’s happening in the other lanes. The big mistakes happen when retailers try to change lanes too often. That’s when they risk becoming road kill.
Tom Zatina
Guest
Tom Zatina
15 years 11 months ago

The middle can work when convenience is most important. And if you are in the middle, and are most convenient, then you own that lane…until the road gets expanded.

Laurie Cozart
Guest
Laurie Cozart
15 years 11 months ago

I agree with Ian. Too many retailers forget which customers they are chasing after. Look at Wet Seal for example. The troubled retailer has jumped from posing as Arden B. to posing as Hollisters to posing as Forever 21. As a consumer, when I walk into my favorite store, I want to know I will see the same type of merchandise priced at the same type of price points. I want my shopping experience to be consistent. Please don’t confuse me!

Ian Percy
Guest
15 years 11 months ago

All right, it’s true. I was watching American Idol. The other night Simon said to one contestant, “You’re one of the few who knows who they are musically.” This is the problem with middle of the road retailers – they don’t know who they are.

The best advice is to discover that ‘soul’ and then be it with everything you’ve got. Yes, that means some people won’t be your customers…but many will. And isn’t that better than losing them all? Few people like luke-warm coffee. And no one likes a person with no personality. Same for retail shops. So for goodness sake, pick your lane!

Karen Kingsley
Guest
Karen Kingsley
15 years 11 months ago

The key to achieving this is separating the price from the value segmentation. It’s not about price (unless you’re Wal-Mart or a Dollar Store); it’s about value.

Trader Joe’s does not offer the best price for food, nor the cheapest items. But if I want cashews, or high-end granola, or great frozen prepared foods, they offer the best value. Are there cheaper frozen prepared foods? Yes. Are there better and more expensive frozen prepared foods? Always. But TJ’s offers the best combination of the two.

It’s a small space available to retailers to occupy, but there is room. In apparel, Gap, Banana Republic, etc. do well, as do Urban Outfitters and Anthropologie. They are not high-end, nor are they at the low-end. They offer a middle-of-the-road position that delivers quality product at a good price. When Gap veered from this and got too cheap and too trendy, they stumbled. When they reverted to their core value position, traffic reflected that.

Gene Hoffman
Guest
Gene Hoffman
15 years 11 months ago

George, you mentioned Big Bear. I remember when Big Bear had the No. 1 share in the Greater Columbus market back when dynamic Wayne Brown owned and operated that chain with his sights always set on doing what was necessary to stay on top. Big Bear had the biggest stores and the most competitive prices then, and the most exciting product presentation. The market responded. Then Wayne got older and sold, and while Big Bear stores stayed on a plateau for a while, the market kept changing, which subtly moved Big Bear toward the middle of the road. Meanwhile, Kroger got even more aggressive and built newer, forward-paced stores and eventually earned the #1 spot. Next came Meijer, then Wal-Mart, Aldi, etc. Meanwhile Kroger kept plugging away.

Result: There was not enough room left in the middle of the road for anything but dynamic retailing. There rarely is. Nothing is more appealing to the public than convenience with low prices or attainable luxury for its psychic satisfaction.

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