From December 2007

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Attention Small Mart Shoppers
For a long time it was all about “big” – big stores, deep product offerings, expansive thinking. Now the tide has turned: Retail executives are not only thinking small, they’re building smaller stores, delivering edited product assortments and betting that this approach will deliver a big return on investment.

Nowhere is that more apparent than in the supermarket channel. Since Tesco announced its British invasion last year, the spotlight has been on stores of the 10,000-sq.-ft. variety. Safeway’s chairman is prepared to open smaller stores if Tesco’s Fresh & Easy Neighborhood Market clicks. Wal-Mart has registered two new trademarks and is expected to test a convenience store format in Southern California, where they’ve struggled to overcome big-box opposition. Whole Foods announced intentions to convert a former Wild Oats store in Colorado to a Whole Foods Market Express.

Food retailers are not the only ones hip to being small. Circuit City is adding smaller-scale The City stores to its mix, and Tiffany & Co. will open 2,000-sq.-ft. “Collections” shops. JCPenney is trying smaller, off-mall shops, and Best Buy is opening units that are up to 40 percent smaller than its current stores.

Rewriting the Rules of Engagement
These days shoppers can connect to just about anyone, anywhere at anytime. Expect that increased visibility to rewrite the rules of engagement for retailers and marketers.

We’re fast approaching a time when entire cities will be wireless. Hot spots are already commonplace, and the next generation of wireless (802.11n) promises to re-engineer access in environments such as retail stores, where the use of multiple devices creates multiple hurdles. What all that means is that more shoppers will be splitting their time between looking at the device in their hands and looking at the shelves.

And that assumes they’re visiting your store. The always-on generation, which is moving into its prime spending years, doesn’t always see the need to visit a store. Its members use their social networking skills to determine whether an item is worth buying, then complete that purchase using their cell phone or other electronic device. In 2008, retailers will need to ask themselves: Am I really a multi-channel retailer if I’m not making product available via the mobile web?

Look for one of the “it” applications for ’08 to be Mobile Social Software (MoSoSo) tools that connect people through wireless phones using location-based services. They’ve been around for a while (with mixed results), but as Facebook and MySpace become omnipresent and Google’s plans for OpenSocial take root, MoSoSo apps will quickly become the de facto standard.

These data-rich experiences cast a blinding spotlight on the need for greater business intelligence; managing data more effectively and making it actionable will be synonymous with success.

Steady Doses of Inconsistency
You know this guy, right? Installed solar panels on the roof of his home; insists on cutting his grass with a push mower; recycles with vengeance. Yet, parked in his driveway is a Hummer. Having trouble putting the pieces together? That’s the challenge retailers and marketers face.

Companies that can figure out how to cater to consumers’ paradoxical desires have the best chance to succeed.

The purchasing paradox weaves together trends and counter trends; customers want to fit in with the crowd, own the latest must-have gadget, but at the same time they want to customize their purchases. Inconsistency reigns supreme: the woman who carries a Coach handbag and buys only organic meat and produce insists she never pays full-price for apparel.
 

The consumer economy remains split by the haves and have nots, and this dichotomy will grow more pronounced in 2008. High-end luxury and couture fashion may weather economic hits, but just about everyone else is in for a very bumpy ride.

Today’s consumer is best defined as the choice generation. They hold the power to TiVo past your ads, batch delete your e-mails and opt out of everything from telemarketing calls to newsletters. Finding ways to connect with them will be one of the greatest challenges of the coming year.

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