retail news in context, analysis with attitude

USA Today has a story about the Whited family of Marietta, Ga., which it uses as a template for a broader American story: “While their total income far exceeds what most American families make, in a post-recession nation still adapting to higher food and gasoline prices and a still-shaky employment picture, their ultra-value-conscious shopping habits square perfectly with millions of other American families who can't let go of the tough lessons learned from the Great Recession. America's largest and most familiar retailers - from Walmart to Target to 7-Eleven - have been forced to bend to this new reality.”

Here’s one of the ways that the paper frames the broader story:

“Nearly 45% of consumers say they have become ‘more practical and realistic in purchases,’ according to a May consumer survey by BIGresearch. That's up from 43% May 2010 and up from 37% five years ago.

“Few things are more practical than the use of coupons. Before the recession, 22% of households reported using them. During the recession, the figure ballooned to 35%. But now, even with the recession supposedly in the rearview mirror, an even higher 37% of consumers say they use them, Nielsen reports.

“Nor is it just lower- or middle-income consumers who clip coupons, but higher-income shoppers, too...”

This trend is translating into not just higher coupon usage, but also more private brand sales and a greater emphasis on value, not just by the likes of Walmart and Target, but also by up-market retailers that focus on specialty foods and c-stores like 7-Eleven that traditionally have made convenience their biggest selling point. No more.

One interesting case cited by USA Today: “Seattle's Best Coffee, the value brand owned by Starbucks that is growing at a double-digit pace. A bag of Seattle's Best coffee at the grocery store typically costs as much as $2 less than its big sister Starbucks brand.

“The brand's entire strategy is quality for the masses. Eighteen months ago it was sold in just 3,000 locations, but the brand is now sold in upwards of 50,000 locations, including Burger King, Subway and AMC Theaters.”

The continuing recessionary mindset, it seems, is creating opportunity as well as challenges.
KC's View:
The interesting thing about this is that all this value shopping and value retailing appears to be taking place at the same time as suppliers are constantly talking about raising their prices because of the rising cost of goods. Which would mean that increased prices will mean that shoppers will have to be even more careful and selective about what they buy, and that discretionary purchases will become even more rare than they have been.

The question is, who will market most effectively to this mindset? Will it be Walmart or Target? Winco or Kroger? Costco or...someone else that isn’t even on the radar at the moment? (This is a question that must be asked by retailers in every segment.)

Will it be you?