By Richard Wright
Shopping Is Easier Online
“Online sales are where the action is. Sales at retail were horrible last year over Christmas, but not so with online sales. People are finding that the stores aren’t enticing. They’re not exciting. They think: ‘I’ll just go online and shop because what I really need to find I can find online. I can put color with it, like adding pillows of my choice, not the pillows that you’re offering.’
“We’re seeing that need to customize and personalize much more, and sometimes it’s just easier to do that online. Pick this cushion, pick this umbrella, pick this pillow. It’s just easier online because we’re not offering it in the stores in a way that makes sense for the new consumer.”
Housing – Good News & Bad
“We’re in a modest recovery. New home sales will reach 1.4 million in 2014. It was only 989,000 last year. So that’s good news.
“In 2015 it will reach 1.5 million. That’s good, but remember that, prior to the recession, we were at 2.2 million new home sales.
“Existing home sales will reach 5.2 million in 2014, then 5.7 million in 2015. During the recession they were at 4 million at best. Now here’s the exciting thing. We’re going to have 4.5 million new households formed over the next three years. That’s very exciting because people spend about $10,000 in their first year after moving, and we haven’t been moving a lot. So this is good.
“Basically, members of Gen Y (92 million strong) are finally going out and beginning to buy homes. They were delayed. They’re waiting until 31 now to buy a home. It used to be 26, then it was 28 and now it’s 31. So that delay has created pent-up demand.
“That’s good news, right?
“Trouble is, people will continue to spend cautiously and more in line with their income, which was the problem before the recession. We weren’t spending in line with our income.
“That first-time home buyer is 31. Their dual income is $67,400. The square footage of the home is 1,670 and the median cost is $170,000. So, we’ve got a lot of new households forming, but you sure as heck better understand who they are because they are researching two-and-a-half hours on average on products they want to purchase.
“They know what they want. They know where they want it. They know what they’re going to pay for it. They are very, very cautionary spenders. They will upgrade, but if they buy a more expensive outdoor set, that means they’re going to buy a cheap grill; they will trade down to trade up.
“They’re very cautious, and they don’t have the money. These guys had to save 20 percent for a down payment, so they don’t have a lot of money and they are not earning a lot of money. They are not earning the money they thought they would out of college.
“That’s why their lifestyle is out of whack. All their expectations are a little bit skewed right now.”
Who Should Your Customer Really Be?
“Here’s a really good point.
“Who your customer is, is not always who your customer should be.
“You may go to market with your present customer in mind, but our research is showing that a lot of customers that you should have, are not your customers right now.
“I would ask two questions of a retailer: Who is your customer now? Who should your customer be in the future?
“Right now your customer is a Baby Boomer, your future customer is Gen Y. You’re going to have to satisfy both, and you can’t satisfy both with the same old approach.
“Gen Y and Baby Boomers have some of the same characteristics, for one reason. Baby Boomers look to Gen Y for fashion advice, which has not been heard of in other segments of cohorts in prior generations.
“Gen Y has become such an advisor to us in technology and electronics that we look to them for fashion advice as well. Retailers have to understand that they must pay attention not only to today’s customer, but to the customer of the future. If they don’t, they won’t be here for the future.
“My advice to retailers on how they should shop markets while keeping those two groups in mind, is as follows:
“If you still want to stick with brown, look at some of the lighter browns. Stop keeping it such a dark brown. There are beautiful new cappuccino finishes and lighter browns available.
“You need a warm gray in your mix because there are a lot of Gen Y’s who don’t want brown. So look at a warm gray. It can have brown in it and underneath it instead of on top, but look for a warm gray. Look for some of the new bronzes.
“Red is still Glen Raven’s second best-selling color. Seriously. You’ve got to have color. Red, corals. You shouldn’t be afraid of teal as a basecloth. Anchor it with some beautiful colors. If you have these wonderful neutrals, you need to have reds, you need to have some corals, you need to have some teals on the floor to provide a new direction for your new customers. It’s really a color world. Change your look.
“Consumers are bored with retail. Studies show that interest in retail has decreased by 15 percent. They don’t even want to go into a store; you’ve got to give them a reason to come in.
“Look at your choices of color. Can a patio shop have a customized, personalized approach? Yes, but if you don’t explain the message, your customer won’t understand.
“You can’t just put that fabric book down on the furniture set and say, ‘Oh yeah, it comes in other fabrics.’ That doesn’t work. The point is: Where is your social media? Where’s your website? Consumers are researching products they want to purchase for two-and-a-half hours before they even get to your store. Where’s your message about customization?
“You need a sign that says, ‘We are your customization resource; just look at all the great stuff you can do in here.’ Retailers think about their store, their store, their store. They are not thinking enough about social media and websites.”
The Appeal & Success of Restoration Hardware
“Their style is all one point of view. It’s classic design with modern tweaks that have authenticity, vintage and heritage behind them. The stores are a gallery, a museum, an inspiration point beyond belief.
“They’re like Frontgate. They have a market that is very aspirational, and they have a look and a point of view. They’re not confusing you, not giving you all these different styles and things. They make it really easy to understand who they are, and that’s a tough trick to do in retail.
“Anthropologie does it; you understand who they are. There are very few retailers that have a point of view that’s clear, defined and understandable. Anthropologie has it; Restoration has it; Crate & Barrel has it, and Williams-Sonoma has it. You know who they are.
“Our specialty stores are having a tough time, but they should know that retail is going to get tougher. Retail is not going to get easier. Just because the economy is coming back doesn’t mean that retail is going to get easier. It’s not. It’s actually going to get harder. I don’t think too many people understand that. They see these stats of new homes being built and remodeling stats are up and blah, blah, blah. But they don’t understand that doesn’t equate to more retail.
“We’ve got a savvy shopper; we’ve got a considered shopper. We have a shopper who doesn’t have a lot of time, and we have a shopper who is very, very smart and can find what they want with their fingertips versus their eyes. Fingertips start first and the eyes are second. Normally retail used to be all with the eyes. You would go in; you would look at the product. But when you start with fingertips versus eyes, that’s just a different approach to retail.
“With Restoration Hardware it’s the experience. My favorite Ralph Lauren store is in Tokyo; he started it way before Restoration Hardware. They have Happy Hour. They have seating. They have concierges in every department. They have people who want to talk to you.
“Ralph Lauren has a point of view and a style. Just look how long he has managed that point of view. How many people last that long (laughs)? It’s so classic and timeless and beautiful. But you can go in and have a Cosmopolitan, or a little Martini. They mix it for you right there (laughs).
“The problem is that our specialty stores don’t understand that Gen Y would like to see them succeed. Gen Y would love to have a Mom and Pop store succeed; they love shopping locally. But they are only going to shop there if you understand what they want. The future is Gen Y; there are 92 million of them, a bigger group than the Baby Boomers.
“But what does your website look like? What does your social media look like? What are you doing out there? What are you doing for your community? How are you selling outside of your space? Get a cute little truck and drive it around town and sell products. Instead of a food truck, get an (Outdoor Room) truck.
“A recent survey found that retailers need to recreate their space to facilitate impulse purchases, to upsell, cost-sell and promote discovery. Name one patio store that is doing that.”
Maxine Lauer is CEO of Sphere Trending. She can be reached at (248) 681-3945 or email@example.com.