November 2007
Rethink, Rework, renew, re-energize By Stan Pohmer

As if retail weren’t a tough enough game already, new challenges — many of which you have no direct control over — will make your lives even more interesting!

There’s the negative effect on consumer spending, with more and more discretionary income dollars being taken off the table thanks to higher energy and living costs. We’re experiencing tighter credit markets, with consumers concerned about the debt built up in the past few years after they spent freely, sometimes recklessly. There’s a marked reduction in net worth as consumers see the value of their homes shrinking, especially the Boomers, those in the market for their first homes and those who just purchased their first homes (many with zero-down and adjustable-rate mortgages that will balloon when the rates are reset). For many, their home was their retirement nest egg, and for new homeowners, many are finding that their mortgages are now higher than their actual home value.

Most importantly, we’re seeing a dramatic change in our core customers and the impact they have on our businesses. As the Boomers (who have fueled our sales and growth for the past more than 20 years) age, we’re seeing less time spent in the garden and more time and money spent on other pastimes and hobbies. More of our “traditional gardeners” are turning into outdoor living enthusiasts, and though they still buy, they buy less but probably enjoy what they do purchase more.

The “lost generations,” the X-ers and Y-ers, are coming into their own in increasing numbers and have money to spend but completely different financial, cultural, and workplace values and motivators than the Boomers. I say “lost generation” because most of us skipped marketing to them and developing them as future customers while we focused almost all of our attention on their parents.

These new spenders have the financial resources but are impatient, respond to different types of communication such as podcasts and the Internet, want to enjoy their purchases and get experiences without having to work for them. And, most importantly, they are inexperienced with our products, not knowing too much about plants or flowers. They look at what we sell as “work,” not something they can enjoy. They value their time and what leisure time they do have is viewed as their own to enjoy. They want instant gratification and are unwilling to wait while a budded flower in a 4-inch container matures to its full splendor. They are more willing to pay someone to do the work and simply enjoy what they paid for.

Rethink…

We can no longer ignore the changing customer dynamics that will affect our businesses tomorrow and in the future. We need to study and understand each of these demographic segments, their purchase motivators and how each uses our products. We need to better understand how they communicate with their peers and then start communicating to them in these same ways. We need to find out what is important to them in their various life stages and then figure out how we can accommodate their needs and wants. We need to position our products to have relevance to them and their lifestyles.

They are in the driver’s seat, and we have to adapt to them — not them to us. No, this isn’t your father’s Oldsmobile anymore.

Rework…

I see tremendous opportunity for retailers who do the homework, study and anticipate their customer needs and desires, then change their programs, products and services to meet them head on. In my travels working with clients and studying retail and the consumer, it’s interesting to see that the most receptive and reactive retailers to address change are those who are already successful. They recognize that what made them successful today and in the past will not carry them to success tomorrow. I’m not suggesting that you throw everything you’ve built out the window and start fresh. But you should have a plan to address and appeal to the younger consumer while still serving your older, core customer; this should be a gradual yet deliberate change over time, as you shift more of your emphasis to the “new” customers.

A good example of employing this strategy is Bachman’s, the very successful and venerable icon of Minneapolis-St. Paul. This 122-year-old company “owned” the L&G marketplace in the Twin Cities for many years, setting the standard for quality, service and presentation. Despite the rapid rise of the big boxes, Bachman’s held its own, primarily because of the tremendous brand loyalty it cultivated and marketed; the color purple was synonymous with Bachman’s. But Bachman’s saw that its image and loyalties were tied to an older customer demographic, and was working against appealing and attracting the younger generations. The retailer added a new department called “Wink” with funky and fun products that better addressed the tastes of the younger customer, and while purple is still a recognizable part of their brand, they added hot and flashy color to their image. They didn’t abandon their core customer base; they created opportunities for the younger customers to connect with them on the younger customers’ terms. While this strategy rolled out only about 18 months ago, and I’m not privy to the company’s strategic plans, my guess is Bachman’s will expand its programs to younger customers over time as they see their customer base shifting.

Renew…

Let’s face reality for a minute: Change isn’t fun, nor is it easy. But change for the right reasons can be a tremendous catalyst for renewing your commitment to your business, and developing a new sense of direction. Change can be exciting; your customer base will be happy to see these changes (as long as you don’t abandon them in the process) and the fresh new approach you take. And strategic changes will help you appeal to the new customer demographic, broadening your customer base.

And please don’t forget that the way you communicate to your new, younger customers probably won’t be the same way you get your message to your core consumers. You may have to “work” the Internet, add podcasts to your website and ramp up your e-mail marketing efforts, while not jettisoning your existing communications methods for your core customers.

Re-energize…

For retailers, there’s nothing more invigorating than seeing new things work; you feed off the energy that’s generated. Trying new things (for the right reasons!), seeing new customers coming through the front door and knowing that you are working toward your future success can be the most satisfying (personally and financially) part of this whole process.

Yes, change involves risk, but not changing is even riskier. Rethink, rework, renew, re-energize…Do you really have any alternative?

Stan Pohmer

Stan Pohmer is president of Pohmer Consulting Group in Minnetonka, Minn. He can be reached at [email protected] or 612.605.8799.





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