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UPCOMING EVENTS
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| Which retailer is going to post the highest growth over the next twelve months? Vote and view live poll results |
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| Recent Poll: 56% say their in-store marketing can cope with ‘planned’ impulse purchases. See full results below. |
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What Does Target Want to Be?
On the same day last week, we came across two articles about Target that almost totally contradicted each other. Is Target going after the Walmart customer, or the Costco customer? Apparently it depends on whom you ask.
Marketplace on American Public Radio says in a short piece that “Target Wants to Be More Like Costco”, quoting retail consultant Burt Flickinger as saying, “Target's trying to lower its price image by adding big bulk warehouse items.”
Flickinger says the strategy may help, but Costco will probably remain the king of 36-pack toilet paper. He says stores have to push bargain items to bring in buyers. |
True, no doubt. But the Wall Street Journal, meanwhile, says that the bargain shop Target is targeting is Walmart:
After more than two years of being outdistanced by Walmart Stores Inc. (WMT), Target Corp. (TGT) said Tuesday it is coming out with guns blazing, planning to prove it is the low-price leader and offers better quality than its larger rival. Target wants to retool the way many customers view both it and Walmart, Chief Executive Gregg Steinhafel said. "Regardless of the economic environment going forward, we'll continue to address the gap between the perception and the reality of our pricing." |
Target says that, despite the price emphasis, they will "maintain our focus on fashion, design and a superior store experience."
The fourth quarter was the first time in two years that Target outperformed Walmart – though that might be partially due to Target’s numbers being compared to a poor performance the previous year, while Walmart’s compared to a strong year. Nonetheless, it was no doubt a welcome turnaround for Target.
It may also be indicative of a loosening of the pocketbook by consumers. If shoppers are feeling a bit less pinched, perhaps they will once again find ‘cheap chic’ more seductive than straight ‘cheap’.
"Target is now in a better position being less of a discounter with the prospect that some consumers are beginning to be a little less conservative with their money" said David Abella, money manager at Rochdale Investment Management, which holds shares of Target and Walmart Walmart may also be running into something of a wall with those customers having the lowest of incomes, really sapped by the recession at this point, Abella said. |
So we have a couple of questions here – who is Target going after, and regardless of that, who is going to do the best as we move into recovery mode? I’m inclined to think that, other than perhaps stocking a few jumbo packages, Target is going to continue to view Walmart as their main competitor. But the second question is the toughie, so we’ll go with that as our exit question: Which retailer is going to post the highest growth over the next twelve months?
What Makes Consumers Try New Products?
A research study says that in-store marketing is the best way to get consumers to try new products, with the largest group of respondents saying that they tried a new product simply because they saw it in the store.
Unsurprisingly, when those surveyed were asked what made them buy a new product in the categories studied, four in 10 said “they saw it on the shelf or display.” Promotions such as coupons were mentioned as influencing factors by another three in 10. “Referrals by friends” was the next most popular reason behind new product purchases, while advertising was noted by just 8 percent … There were some differences by category: cereals were the most responsive to promotions and couponing, and snack purchases were influenced most by merchandising. |
The survey dealt with grocery stores, and I think it’s likely that advertising would play a larger role in consumer durables and business-to-business product categories.
Sears Selling through Other Retailers
It was just a couple weeks ago that Sears announced they would be selling Die Hard accessories through other retailers, and we commented “Can Kenmore and Craftsman be far behind?” The question was an obvious one, but we didn’t expect an answer so quickly.
The Chicago Tribune tells us that a limited number of Ace Hardware stores will begin selling Craftsman tools, with the entire chain, and possibly other retailers, soon to follow:
… the company's attention is turning to Craftsman, the tool and lawn equipment line that appears to hold the best hope of making it outside of Sears and Kmart walls. Sears signed a deal with Ace Hardware Corp. to sell Craftsman tools at 100 Ace stores starting in May, marking the first time a retailer other than Sears, and more recently its sister division Kmart, has sold the 83-year-old brand, the Chicago Tribune reported late Friday. By June, Ace plans to promote Craftsman products to its 4,500 Ace stores, independent dealers that are part of a cooperative. Sears has been talking to midsize hardware store chains across the country for the past year about carrying Craftsman products in their stores, holding discussions with Oak Brook-based Ace, Do-It-Best Corp. of Fort Wayne, Ind., and Tractor Supply Co. of Brentwood, Tenn., to name a few, according to people familiar with the discussions. |
There also are rumors about Sears offering Kenmore to other retailers, but no confirmation.
The question is whether, as Sears becomes a more powerful manufacturer/supplier, they will weaken themselves further as a retailer. For some people, Sears’ tremendously popular proprietary brands are pretty much the only reasons to shop there.
International Retailing
We mentioned a few weeks ago that India is planning to further open its retail sector. Walmart and Tesco are already there, working through local partnerships, as required under current laws. Carrefour now looks to be the next in line.
French retailer Carrefour, which has been looking to crack the restrictive India market for seven years, plans to kick off its operations in the country this year by setting up a wholesale business. The company also said that it was in talks with local firms as potential partners, but declined to name them. |
This article gives a summary of efforts by major international retailers to grow through acquisitions in developing markets in order to offset the slow growth potential of their home countries:
The world's largest food retailers mount multiple investment forays. They take place not only in the usual BRIC nations of Brazil, Russia, India and China, but also in diverse geographies in Asia, Latin America and Central Europe. Last year, for example, Walmart Stores Inc. paid $2.66 billion in cash and shares to buy Chile's third-largest grocery chain, Distribución y Servicio SA. French giant Auchan SA acquired the remaining 51% stake it didn't own in Romanian chain MGV Distri-Hiper SA. South Korea's Lotte Shopping Co. Ltd. announced it would spend almost $1 billion over four years to expand its network of supermarkets in Indonesia, after paying about $200 million to acquire the existing chain Makro Indonesia PT. "Big global retailers are more clearly focused on bigger, faster-growing markets," says Frank Badillo, senior economist for retail industry research firm Kantar Retail. |
New Media: Localized Text Messaging
The North Face has created a text messaging program that sends specialized ad messages to shoppers who travel into the proximity of a store caring their merchandise.
The North Face is taking advantage of geo-targeting capabilities on mobile devices to send text messages to potential customers whenever they are near a store that carries North Face gear. The campaign is based in and around New York, San Francisco, Seattle and Boston, and text alerts are sent only to those who have opted in to receive such messages … |
On March 10, we’ll be hosting a webinar by MEI, What Does ‘Trade Promotion Optimization’ Really Mean? Click on the banner or link above to get more information and to register.
Last Week's Poll
Last week, we discussed new research indicating that most shoppers have a mental budget for unplanned purchases when they enter the store, and asked if our readers’ in-store marketing programs are set up to handle this type of shopper. “Are your Shopper Marketing and other in-store programs able to appeal to consumers who make ‘planned’ impulse buys?”
- 56%: Yes – This is built in to most of our efforts
- 28%: Not now – but we should take this into account for the future
- 17%: No – we’re mostly not aimed at impulse buys
A slight majority is already set up to deal with this type of shopper behavior, and another quarter think they will try to adjust for it in the future.
Quickly Noted
GM to Let Hummer Die as China Deal Falls Through
Like Pontiac, Saturn and Oldsmobile before it, the Hummer brand is about to disappear. General Motors thought they had a deal with a Chinese company to buy Hummer, but that fell through (as a Saturn deal also collapsed), and with no other potential buyers on the horizon, Hummer will disappear from the marketplace. GM says they will concentrate on their remaining Chevrolet, Buick, GMC, and Cadillac brands.
Marketing Daily, 24 February 2010
Some Olympics Hours Include 20 Minutes of Ad Time
No, it wasn’t just your imagination – the Olympics really were just one ad after another. A typical prime time hour contains 14-16 minutes of advertising, but Olympic coverage had as much as 20 minutes per hour. From the beginning, NBC had expected to lose money on the Olympics, on which it bid in 2003 in the expectation that the ad market would continue to grow. With the recession, losses are now expected to go much higher, as much as $250mil. Thus the ad glut, in an attempt to offset some of the red ink.
MediaBuyerPlanner, 23 February 2010
Coke's Big Move Alters Two Atlanta Giants
Coca-Cola will take over the North American operations of its largest bottler, Coca-Cola Enterprises. CCE will continue to cover western Europe. Coke is following the lead of its principal rival, Pepsi-Cola, which last year bought out its two biggest US bottlers. The idea, for both companies, appears to be to allow the parent company to deal directly with major retailers, restaurants, and food service companies, rather than to work through independent bottlers.
Atlanta Journal-Constitution, 25 February 2010
Bashas' Amends Reorganization Plan
The Arizona chain, which entered Chapter 11 several months ago, has offered a new reorganization plan, in response to an offer from Albertsons to buy the company. The new plan would allow the chain to remain under the control of the Basha family, and would pay off creditors over several years. Creditors are split, with the larger ones preferring the quicker payoff from a buyout. Albertsons is a 200+ chain spun off from the Supervalu buyout several years ago. Bashas’ is currently fourth in Arizona with Albertsons fifth, but the combo would be a stronger competitor, moving ahead of Safeway and holding close to 20% of the market. Walmart and Fry’s lead in market share.
Arizona Republic, 26 February 2010
Director Business Development
Catalina Marketing
St. Petersburg, FL
Increase total retailer chain revenue to corporation representing Retail Services and Manufacturer Services. Build business partnerships as a marketing consultant providing the client access to the vast resources and industry knowledge in the Catalina Marketing network of employees and associates. For more information, click here.
Channel Marketing Director
Barnes & Noble.com
New York, NY
Drive marketing relationships and planning with key channel partners, which include B&N booksellers. Develop and manage integrated marketing plan for all aspects of product introduction and lifecycle, including launch planning, account advertising, visual merchandising, training, incentive programs, direct response campaigns and consumer and partner channel promotions. For more information, click here.
Trade Marketing Manager - Retail
Dean Foods Company
Dallas, TX
This role will oversee the trade spending and business building activities for the designated business. This person will be held accountable for building the process by which funds are allocated and requested. They will work closely with the Business Leadership team to understand the needed brand message to consumers and to work with sales to ensure that desired performance and return on investment (ROI) are generated by every trade dollar invested. For more information, click here.
