What’s new August-September 2012

Reinventing and Selling Innovation in Consumer Electronics

“Everything that can be invented has been invented.”

Charles H. Duell, commissioner of the U.S. Office of Patents, 1899

Commenting at the cusp of the twentieth century, Duell had reason to make such a claim. The great innovations of the industrial revolution had conquered countries and connected continents.

Machinery had revolutionised both the factory system and agricultural production. But a hint of the information age that was to follow was also emerging: Thomas Edison invented the electric typewriter in 1872 and the phonograph in 1877. Consumer electronics had been founded. What business and entertainment devices lay ahead?

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Fast forward: VCRs, personal computers, the Sony Walkman, CD players, mobile phones, games consoles, DVDs, MP3 players. iPod. iPhone. iPad. Business Monitor International estimates that the Australian consumer electronics market to be worth around US$16.6bn in 2012, and will grow at around 4% a year to 2016.

AMP Capital Shopping Centres Australian’s Shopping Intent Reports (ASI) show that after some consumer caution in 2009, Australian expenditure in the category has remained consistent in the post-GFC retail era. Those who claimed they were spending more on technology jumped from 5% in 2009 to 13% in 2010, and have levelled out at around 11% in 2012.

The April 2012 ASI indicates that around 47% of shoppers intend to spend about the same amount on technology such as mobile phones, computers and gaming consoles as they have in the previous year.

It also shows that males are stronger spenders on technology: women are more likely than men to spend less or not at all, and men are more likely than women to spend the same or more than usual. Women over 65 years of age are most likely to not spend on the category at all (22%), while amongst those perennial lovers of consumer technology, 18-24 year olds, 17% are spending more, keeping up appearances and connections with their friends.

Consumer electronics, of course, is both a product category and a form of retail capital: providing personal, portable, purchasing power for consumers to research and shop online – not least for new versions of the very devices they are connecting with.

The ASI research shows that in the last year, fewer people are purchasing technology products from physical stores only (35% compared with 39%), and more are purchasing from a combination of physical and online stores (42% compared with 38%). Reflective of the rise of multi-channelling, there has been a slight decline in shoppers purchasing technology from online stores only (down from 9% to 7%).

This reflects other research form Directional Insights that shows consumers partaking in more cross over shopping, or multi-channelling, between online and physical stores.

Looking ahead, 36% of survey respondents believed that their spending on Technology will increase. This placed it second behind Take Home Food and Groceries (52%) and equal with Alcohol for Home Consumption, amongst product categories expected to attract greater expenditure.

It is no surprise, then, that Apple Stores, which also create community and focus on interactivity, are proving so popular and successful in shopping centres. Or that Microsoft is following Apple’s lead in trying to create an immersive retail experience to push its brand.

JB Hi-Fi, too, is continuing its expansion with plans to open up to 15 stores per annum over the next four-to-five years.

The lesson? Unless it’s bargain basement, shoppers are looking for an experience as well as a transaction. Merchandise must be brought to life by well trained, knowledgeable staff. And the product should exceed expectations. This is clear in the relatively strong category of consumer electronics. By Directional Insights Back To Top

A Working Mum’s Emotional Journey – Shopping

Everybody knows that price and convenience are the logical drivers of online retail. While emotional and egotistical drivers have been considered the domain of bricks and mortar – places where customers could indulge in the experience of shopping.

Recent qualitative research from Directional Insights overturns this characterisation: customers are also finding emotional and egotistical rewards through shopping online.

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Let’s explore this by looking at the shopping activities of one of our focus group participants who we’ll call Betty. Betty has two young children under 9 years of age. She works around 20 hours a week in corporate marketing and has a partner working full-time. She loves shopping and tends to use cash, after paying off her credit card a few years ago.

We’ll assume that Betty fits the average customer profile identified in Directional Insights’ 2012 Lifestage Benchmarks for Young Families, that is she is in a married/de facto relationship with children under the age of 15 living at home. Her household income is $97,800. She is 39 years of age. And she is one of 91% of shopping centre customers from this segment who arrive by car; and part of the 79% who are women.

Betty’s shopping trips over the last year have become increasingly planned. Those made with her kids, she says, involve almost military precision. She tends to use one-stop-shops such as Myer or Kmart, especially as most of her shopping nowadays is for other people.

This, too, is typical: 76% of Young Family shopping centre customers are mission shoppers – slightly above the overall average of 72%.

Shopping with her boys, Tom and Riley, is stressful, busy and chaotic. Betty finds it difficult to think straight, and always ends up spending extra when they demand this and that. Shops feel like they’re designed to exploit this and there are some she dare not go near, including some fast food outlets. She leaves exhausted.

Betty, though, has found a better way. She goes online at night when the kids have gone to bed, enjoying some “me-time” browsing online retail sites. There is no time pressure, no queues, and fashion variety and sizing that she feels suit her at this stage of life. She’s in the comfort of her own home and doesn’t have to buy straight away. She can even sip on a glass of wine while browsing!

It’s also exciting. When the package arrives, she says, it feels “like you have won lotto”.

Betty’s online shopping is not confined to home: “If I am stressed at work then I will go online and look at shoes. It’s a distraction.”

Akin to many other working mothers, the responsibilities that come with work and kids have made the quality shopping trip a rarity. Shopping for Betty has gradually become mission focused and usually involves prior research to help streamline the process.

However, given the opportunity, she still enjoys the experience of a good cafe, quality service and a break from her partner and kids. And while shopping centres are competing with the practical benefits of online as well as the emotional attachments it can provide, the good news is that women like Betty still see a shopping centre trip as a reward – an almost guilty indulgence.

While specialty entertainment has provided promising results in attracting customers to centres in the past, customers are now putting more emphasis on the entire experience. Just as a good movie needs a quality beginning, middle and end, a good shopping experience starts the minute customers hop in the car and does not finish until they exit. Every little detail counts.

Anything that represents inconvenience can result in an abandoned purchase or shortened shopping trip.

The human interactions of physical retail and the social experience of shopping with girlfriends are difficult to digitally emulate. Conversely, many of the reported positives of online shopping – merchandise quality, variety and sizing, good service, detailed product information, and convenience – can all be replicated by physical stores.

Betty is now an omni-shopper. She will not stop shopping online. She will keep shopping in stores. Her engagement with retail will combine technology and personal interaction. She will choose the combination that best suits her needs, Shopping centres and physical retailers can meet a great many of them.  Back To Top

The Long Pockets and Short Arms of Male Shoppers

The shopping centre has long been the domain of women. The first centres in the 1960s were heavily promoted as a new public space for housewives – a place to get out of the house, socialise with friends, and purchase under one roof everything the family required.

The housewife might bring her husband back on the weekend to make a joint decision on a major purchase, but the shopping centre was largely considered, and marketed as a female space.

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Although over time shopping centres have broadened their appeal and worked assiduously to create family friendly environments, and more men are engaged with both daily and discretionary shopping, women are still responsible for 73% of visitations to Australian shopping centres.

Which begs the question; is the male the invisible shopper? Well, no… but we can explore his shopping psychology and behaviour further. We can also design retail environments to better cater to his desired shopping patterns and to encourage his hand to move towards his wallet more frequently and enthusiastically.

Men shop. They don’t shop like women, but they do shop. What’s more, many like making purchases – they just don’t always enjoy the process. Men think of themselves as practical, rational shoppers, and to a certain degree, this is true. They don’t like their time being wasted. They tend to know what they want to purchase, and like the process to be as efficient as possible.

To put it primitively, as one male shopper we spoke to did: “I’ve got it, it’s done. I’ve gone out, I’ve killed my dinner and I’ve brought it back.”

Men value staff who can provide sound and detailed product knowledge, particularly for big ticket items. They also appreciate genuine advice when choosing fashion – a product category in which they do not always feel at home.

Men also tend to buy in phases and in bulk. They might not buy clothes for a year and then go out and refresh their entire wardrobe. This often coincides with a change in life stage: a new job, a split with a girlfriend, perhaps a new relationship and so on.

In this way, men are reactive customers – they shop in response to larger events in their lives. And while this pattern fits with their self-perception as practical shoppers – shopping to fill the needs of the moment – emotional drivers are also exhibited in these shopping phases.

Following a relationship break up, one thirty year old male told us that shopping was part of his process of reinvigoration: “When I broke up with my girlfriend, a few elements in my life had become a bit staid… I was going through my wardrobe going that’s crap, that’s crap. I spent $500 on a new outfit because it had been five years since I’d bought clothes. I needed to refresh.”

With the ex-girlfriend went the old clothes. Replacing them was a way of moving on, marking a new life stage, and feeling emotionally and psychologically renewed.

Other men speak about going through more mundane phases: one year they might purchase heavily on technology. The next might be homewares. They might then start looking at their wardrobe again. This pattern is quite distinct from the more diverse and contiguous female shopping pattern.

Perhaps men just can’t concentrate on more than one thing at a time, but they also have the luxury of being able to focus on themselves and their own interests.

The men we spoke to in our latest consumer research did not have children, but we know that even those with children make fewer purchasing decisions than their female partners. Women remain responsible for large segments of family expenditure, including buying for their children and their male partners.

Men, on the other hand, are largely free agent shoppers. And while some habitualise towards phase shopping, they are by no means limited to it.

One of the best ways to snap them out of it is with sales. Men love bargains! “I’ve walked past the store twenty times and have not gone in because I am not willing to pay full price… but when it’s on sale, I’m willing to enter into the conversation.” When this man saw a sale sign outside a store he had so often bypassed, he responded with interest. Rationality went out the window: “the very attractive young sales assistant said: why don’t you try these on?” “I bought three pairs of jeans and a tie I didn’t need.”

The male shopper then, is not as practical as he would like to think.

Shopping environments need to cater to his self-perception of rationality by designing for efficiency, but they can also tempt him with bargains, service that excites his emotional drivers, and sound product information provided by knowledgeable staff. Back To Top

Shopping Centre Style Centre delivers the Look

New research from Directional Insights has found that many Australian women would like more guidance in making fashion choices.

As competition from online shopping intensifies, and local retail remains in transition, customer service is an obvious area in which bricks and mortar retailers can invest.

Online shopping tends to be seen as a competitor on convenience, comparison and cost. But retailing has always also been about the experience of shopping – the hustle and bustle of the market; the tactile enjoyment of sampling produce, fabrics and technology; the visceral exchange of banter and information with a retailer who understands her products and the people attracted to them.

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We have seen such exchanges for thousands of years: in the Greek Agora, the Medieval Market Place, Town Squares and our modern equivalent, the mall or shopping centre.

So faced with flat sales, cautious consumers and online competition, it is not surprising that retailers are again paying closer attention to customer service.

We are also seeing support for their efforts from shopping centre management. In the case of apparel, an example is the increase in style and fashion services provided by shopping centres for women.

New research from Directional Insights has found that this is a worthwhile investment, with women from a range of demographics looking for more help from retailers in ‘putting a look together’.

Women seek out style advice from such style consultants for a variety of reasons. Some might have body image issues. Others are going through life changes and need a new look. Still others might be chasing executive positions and need to hone their personal presentation.

For many, of course, it’s a fun, informative complement to the shopping experience. Directional Insights recently dropped in on the Style Centre @ Charlestown Square, near Newcastle, and got a first-hand look at a well run, well patronised style service that retailers and customers love.

The Centre’s stylist Natalie Baker, is natural, down to earth, engaging and, yes, stylish. Customers can book free 20 minute style consultations with Natalie on Thursdays, Fridays and Saturdays from 10am – 3pm and learn about body shape dressing and key style trends, whilst picking up tips on building fashion and beauty confidence.

Supporting the centre’s marketing plan, the Style Centre @ Charlestown Square promotes awareness of offers from retailers. Gift Cards incentivise customers to visit and spend in store after their consultations.

Customer response has been positive. Samantha said: “I had a lovely time and went and bought 3 outfits that I saw that night… I’ll definitely be attending another one.” Another customer, Rowena, said: “My daughters and I had a great night last Thursday… The champagne and cupcakes were a treat”.

Strong word of mouth has generated further interest; retailers report direct sales as a result of their participation; and the majority of Style Workshops are selling out in advance.

One of the unexpected outcomes of the Style Centre @ Charlestown Square is the way that women are using it socially.

Natalie told us that groups of women are booking successive individual appointments so that they can all participate in the fashion discussion together: trading ideas, having a laugh, and treating themselves to some group shopping therapy. While most Style Centre guests are aged in their 30s and 40s, they range from ladies in their 20s through to an 82 year old!

The Style Centre @ Charlestown Square is a great example of how shopping centres can appeal to women who have moved on from the youth market. They have money to spend, are looking for an enjoyable experience, want some personal service, and are more than happy to shop in a mall that offers it to them. Back To Top

NOTE:This is general information only and does not constitute advice nor take into account any individual’s or company’s specific requirements, and should not be relied upon as such. Readers are advised to seek specific advice. Directional Insights makes no representation nor gives any warranty as to the accuracy of future forecasts. This information is not intended as investment advice or other advice and must not be relied upon as such. You should make your own inquiries and take independent advice tailored to your specific circumstances prior to making any investment or other decision. To the fullest extent permitted by law, any conditions, warranties or liabilities implied by law into these conditions are hereby excluded. All copyright resides with Directional Insights Pty Ltd.
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