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Feb 28, 2006

Top 4 Retail Marketing Trends for 2006: Surprise Weekly Newspapers Are In Again

SUMMARY: No summary available.
For the past five years, brick-and-mortar retailers have been (slowly) shifting marketing dollars away from TV toward online; that shift is still happening, but today online is not the only medium benefiting from it. Event marketing, word of mouth and traditional print advertising may also soon be seeing a lift, says George Anderson, Editor-in-Chief RetailWire.

Here are the top four trends Anderson has spotted in retail marketing for 2006.

Trend #1. Comparison shopping online, purchasing offline

Over the holidays, Anderson points out, statistics show that, while internet sales were up 25% overall, traffic to comparison shopping sites was up 300%.

That indicates that "people are doing their research online and are either buying from catalogs or are walking into stores," he says.

Interestingly, comparison sites were discovering the sale prices that various retailers were going to offer over the holidays and were announcing them before the retailers went public with the pricing. While that helped shoppers in their decision-making process -- and it helped boost the traffic to comparison sites -- retailers were livid because it gave their competitors insight into their upcoming promotions.

According to Gary Williams, Managing Officer Adjoined Consulting, who conducted research for the NRF's 'Data in Retail Demand Insights 2006' report, the online/offline issue is much more complex than what most people believe.

In terms of a pure shopping method, the percentage of those shopping online and buying in stores is decreasing over the past three years (2004: 8.6%; 2005: 8%; 2006: 5.2%). The growth of the “interchangeable” shopper continues in 2006, and the full story is that shoppers are using a combination of three different methods interchangeably – store, online and catalog -- in much greater amounts (2004: 50.5%; 2005: 67.8%; 2006: 70.2%).

Lesson: Consumers want to shop/buy whichever way they want and the key issue for retailers today is consistency across all channels.

Trend #2. Target Envy

"Target is the company that everybody wants to be when they grow up," says Anderson.

That's because Target has convinced consumers that their logo is their brand. "Branding their own company is something that many retailers have difficulty with. But with Target, if you think of a brand as a promise to a consumer, people see that symbol and they have immediate reactions of what that means to them, and it generally means something positive."

Everything Target does includes the Target symbol. It's done consistently, the messages are both fun and hip and they're practical. Plus, unlike much of the competition, that brand symbol carries higher value than low pricing claims that commoditize your brand, celebrity partnerships that can be expensive or ephemeral limited time offers.

"Wal-Mart in particular wants to be Target," Anderson points out. Wal-Mart recently announced that the company is hoping to upscale its image. While they're known for being a store that offers the best price on the basics, they want to be known for other products, as well.

"Essentially, Wal-Mart has identified that they have a whole slew of customers coming in to buy the basics who are going out of the store to buy higher margin items," he says. The perception is that the products are not that great and customer service is lacking.

To counteract that impression, Wal-Mart has updated its website, with the result that it looks much more, well, Target-like. "The top of the page has furniture," Anderson notes.

(Editor's note: Is Ikea the next Target for America? Only if they can improve their Web experience by 1000%.)

Trend #3. Surprise! Weekly newspapers may be back

Anderson predicts that we may begin to see weekly newspapers getting more ad dollars. That's because Wal-Mart, in search of its new image, has begun advertising in weeklies.

For Wal-Mart to include weekly newspapers in its new brand campaign is a switch, and an interesting one, as the newspaper industry has been suffering from a drastic decline in ad pages in recent months.

"There has been more than one person in the newspaper business saying that Wal-Mart's rise is coinciding with newspapers' fall," Anderson says. "But I think what goes around comes around. There's room for all the media and all of them serve their purpose."

If Wal-Mart sticks with weekly newspapers, we'll begin to see the bandwagon effect: anyone that's competing with them will begin to advertise in the weeklies, too.

The brand campaign, which focuses on mini-testimonials, with people talking about how they went to Wal-Mart for one thing but walked out with other, equally wonderful things, will also be running in monthly magazines and on 15-second TV spots.

The NRF's 'Data in Retail Demand Insights 2006' measures the type of media that most influences consumers when selecting a new retailer (versus promotions to increase current customer foot traffic). Data in the report shows an increase in the influence of media articles when choosing a new retailer. However, media article influence was only noted by 4.4% of consumers as being influential.

On the other hand, TV ads remained the most influential media type when selecting a new retailer and, in fact, increased to 31.7% in 2006.

Gary Williams notes, "Therefore, if the Wal-Mart approach is meant to bring customers that have defected to Target, Costco, and other mass discounters, the weekly newspapers will only be a temporary fix. Perhaps Wal-Mart should think hard about a national TV campaign to fix their image."

Trend #4. Word-of-mouth on the rise -- or not?

Although word-of-mouth may be red-hot as a marketing tactic to talk about, NRF research data shows that word-of-mouth is on a slight decline for influencing consumers, from 19.1% down to 17.7% in 2006.

Anderson suspects part of the problem may spring from the fact that while word-of-mouth is much-discussed among marketers, few know how to do it well.

His example of best practices: Trader Joe's, a retailer that describes itself as "Neighborhood grocery stores with foods and beverages from the exotic to the basic."

Anderson spent six months doing what he calls "undercover" on Trader Joe's to find out what it was all about. "I had customers tell me that they used to tell people about Trader Joe's but that they don't tell people about it anymore because [the store] is getting too crowded."

When people get a deal on something, they tend to spread the word. For example, look at what happened with Trader Joe's "Two Buck Chuck." This product is a bottle of $2 Charles Shaw wine that exploded via word-of-mouth after receiving a couple of reviews that said it was actually drinkable and only cost $2.

"Being good is not enough," says Anderson. "To generate word-of-mouth, you have to be exceptional."

Key: This means your product must be *better* than expected. Word-of-mouth happens when you surprise and delight customers with quality and experience.

This factor is especially hard for marketers to carry off because you're trained to (and expected to) promote the full glory of your product like crazy to make the sale, rather than being laid-back about a product so consumers can discover the glory by themselves and champion it. Can you turn off your marketing megaphone so the product or retail experience overdelivers versus expectations? It's a tough challenge even for the best of us.

Useful links related to this article

Executive Summary of NRF Study

Past MarketingSherpa Case Study: How to Succeed by Turning Down Banner Ads -- RetailWire's Unusual Content & Sponsorship Model


Adjoined Consulting

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