What’s new January-February 2014


Like! The Social Media Friend

There is a plethora of commentary on the return on investment of Social Media marketing.

Googling “ROI Social Media” returns millions of hits; multitudes of marketing and retailing conferences devote attention to the issue and Social Media advertising gurus promote themselves by producing research reports and papers claiming to have cracked the code of evidenced based Social Media marketing practice.

Still the ROI is less tangible than we’d all like.

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That is, if it is measured at all.

One recent international report found that while almost 40% of large consumer companies (and 49% of retailers) reported a positive return on their Social Media investment, 44% of companies had not made any attempt to measure it at all. Such assessment, of course, is after the fact. You’ve run your campaign, analysed its impact, and drawn up lessons learned to be incorporated in the next promotion. What else can you inject into the process to improve efficiency, and effectively hit your target market?

One data set to include would be that market’s preferences for marketing, that is, what mediums do your customers like to receive their marketing information through? And, getting more specific, through which mediums do they prefer to receive marketing about shopping centre promotions and events?

It’s a question we ask whenever we interview customers in Australian shopping centres. Obviously, locally specific data is required for each market or trade area, but as a starting point, an awareness of how consumers more broadly consume shopping centre marketing material offers a good introductory guide.

The first thing to note about Social Media as a marketing tool for the retail property industry is that it sits well behind traditional media in terms of customer preference. Far more people prefer to receive information through newspapers, colour catalogues, radio and television than through Social Media.

So while it’s now an essential tool in your marketer’s armoury, it should only be a relatively small component of the overall marketing mix. Social Media is also, as we know, a medium of youth. It is far more popular with consumers under the age of 30 than over. Preference for receiving material through Social Media drops steeply with age thereafter.

Marketing relies on creating buzz and excitement, but it also has to reach the target market. What demographic group makes up the largest proportion of shopping centre customers, and has the highest average spend? Women in their forties and fifties.

Social Media will reach some of these women, but other mediums are far more preferred. When we then look at the shopping patterns of customers who prefer Social Media, we find that they have lower than average spends largely due to their lower spend on Food Retail.

The good news? They spend more than average in Apparel, Homewares, and Leisure product categories.

Recent research shows that Social Media works best in industries that sell products and services consumers are passionate about. This includes retailers. The key to leveraging this interest as marketing capital is to create avid “tribes” of loyalists around such products and services. Combining this with our understanding of the demographics and shopping patterns of customers who want to receive marketing through Social Media, we can see that creating “loyalists” around food retailing is going to be a tough ask.

A youth targeted campaign around fashion and accessories, though, contains more ingredients for success. For more information about our Australian Shopping Centre Marketing Report, give us a call on 1300 138 651 or email us at info@directional.com.au.


Positive Shopping Centre Performance Increases Customer Wellbeing

Shopping is a core activity in the life of most Australians. As such, it can be argued that the nature of the shopping experience can impact on people’s broader quality of life.

The negative side of compulsive shopping is well documented in social research, as well as in popular culture: Isla Fisher’s character in Confessions of a Shopaholic, for example, manages to almost ruin her life through her addiction to purchasing fashion she can’t afford.

But what of the positive aspects? Can shopping improve people’s wellbeing?

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We’re familiar with this notion through catch phrases like ‘retail therapy’, but shopping is more than just buying things – especially in sophisticated modern retail environments. It also includes social, community and leisure aspects of life, which are all part of the shopping experience.

Recent North-American research argues that satisfaction of these life areas contributes to overall feelings of wellbeing among consumers. This satisfaction is tied up with the features of the shopping centre – its functionality, convenience, safety, leisure, atmospherics, and consumers’ self-identification with it.

The researchers found that high levels of satisfaction with the shopping environment on these sorts of attributes translated to higher levels of shopper wellbeing (that is, general life enjoyment and satisfaction). When we combine this with other recent evidence that shopping itself really does make us happy, it suggests that creating great retail environments is not only good business practice, but positively contributes to the lives of the people who patronise our shopping centres.

One of the things we regularly test when conducting consumer research in shopping centres is how customers rank different attributes of a centre. One way to graphically represent whether a centre is meeting customer expectations is to then map the importance customers assign to particular attributes against the performance of the centre on these attributes. This produces a gap analysis.

Figure 1 provides a gap analysis of importance and performance ratings of 10 attributes across all shopping centre types in Australia (from a sample of 26,000 interviews). In this example we see that three attributes (the red dots) fall outside the region of equal importance and performance: value for money; wide variety of stores; and ease of parking.

This tells us some things we already know: that consumers are exceptionally price conscious, that there are issues with homogenisation across shopping centres and that parking is a perennial bugbear with shoppers.

At an individual centre level, though, there will be more diversity in both the expectations of customers and the performance of a centre. Measuring these provides insight into the strength of your centre’s positioning in its trade area.

Meeting customer expectations through performing on these attributes contributes directly to levels of patronage, expenditure, and customer loyalty. But the international research discussed earlier also demonstrates that there is a positive community aspect to providing quality shopping centre environments and that by creating such spaces, companies are engaging in a form of corporate citizenship (even as they grow profits).

International academic research cited in this article can be found in: Kamel El Hedhli, Jean-Charles Chebat, M. Joseph Sirgy, ‘Shopping well-being at the mall: Construct, antecedents, and consequences’, Journal of Business Research, 66 (2013): pp. 856–863.


Mission Shoppers in Focus

If you’ve been following e-directions for a while, you’ll be familiar with the rise of Mission shopping that followed the GFC corrective.

At the same time as consumers became more cautious (and conscious of their buying patterns!), online retailing activity grew, providing ever more information about products, pricing and competition.

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The expansion of Mission shopping was not enormous – just a few percentage points – but it made a difference (especially when we consider categories beyond Food Retail).

One of the objectives of the ‘experiential’ shopping movement over the last few years has been to shift shoppers, particularly in discretionary categories, back towards Leisure shopping patterns. Not least because in traditional shopping centres the average spend of Leisure shoppers is consistently higher than that of Mission shoppers.

Table 1 provides a brief summary of Mission/ Leisure shopping patterns from Directional Insights Consumer Shopping Benchmarks 2013. For a detailed analysis, with data, refer to our article in the Feb 2013 edition of e-directions.

Retail has always had to cater to both the Leisure and Mission shopper. One of the reasons that the Australian shopping centre industry has been so successful is because it has done this very well. There has been, for a long time, a good mix of Neighbourhood, Sub-Regional and Regional centres, which have grown and adapted over time, keeping pace with changes in shopping and leisure patterns.

In centres of all sizes, convenience has been effectively married with pleasant environments. We’ll look further at Leisure shoppers and experiential shopping in the next edition of e-directions, but here we’d like to give you some more information about Mission shoppers.

We all know that men and women shop differently. This is again true when we consider Mission and Leisure shopping patterns. For starters, men are more likely to Mission shop than women. Whilst some men do enjoy the shopping experience, and are willing to browse, many simply want to get what they came for and get out quickly. The average length of shopping trips is still a lot longer for female Mission shoppers than it is for male Mission shoppers (54 minutes compared with 40 minutes). Female Mission shoppers also spend more ($78 compared with $57), are more likely to make a purchase overall, and are more likely to purchase in all categories except Food Catering and Bulky Goods, where the chance of a sale is roughly equal.

Female Mission shoppers average spend in all categories is higher than their male counterparts. Last year we gave you some figures on Apparel shopping (here and here), noting that it was conducive to Leisure or experiential shopping. None-the-less, we all regularly Mission shop for clothes when we need something quickly, identify some must-have items, or simply have other things to get on with (I bought 4 shirts last night in half an hour at a regional centre). So in terms of provision, it’s important to combine pleasant Apparel shopping experiences with efficiency.

As women make up 85% of Apparel shoppers, let’s take a quick glance at their Mission shopping behaviour in this category. The first thing that jumps out from the data is that while women on a Mission shop for Apparel spend less than Apparel shoppers overall ($115 compared with $122), their spend is still strong. Like Leisurely Apparel shoppers, they also have a broad spread of expenditure, grabbing some clothes items in conjunction with other activities, particularly purchasing Food Retail.

Centres performing well on cross-spend here are gaining customer traction through good tenancy mixes and store positioning, leveraging strongly off their supermarket anchors to the benefit of other major retailers and specialty fashion tenants. Women Mission shopping for Apparel are productive customers with a relatively high average spend per minute.

This should be rewarded and facilitated through services that encourage cross shopping. Examples might be central pick up points where goods from multiple shops can be collected, or a designated area in the car park where customers can retrieve their purchases on the way home.

Nothing encapsulates Mission shopping more than Food Retail purchases: in this category the efficiency of the supermarket industry is in tune with consumer behaviour. Mission shoppers conducting a Main Food shop have a strong spend per minute in centre, with an average spend of $139. They do not, though, exhibit a strong cross-shop. Drawing a more diverse spend from customers focused on a big trip to the supermarket is obviously something we’d all like. Again, services facilitating cross-shopping and ease of movement through centres could prove beneficial here.

Mission shopping accounts for the majority of purchases in Australian shopping centres, and while these shoppers spend less than their Leisurely counterparts, they do exhibit strong per minute spend and can be encouraged to cross-shop and move beyond their intended purpose. Efficiency is king for these shoppers and if we want them to extend their shopping trip and visit more stores, we need to make it easy and enticing for them. In our next edition of e-directions we’ll turn our gaze the other way for a look at the less productive but high spending Leisure shopper.


The Buzz

As the first e-Directions of 2014, we’d like to welcome you all back to what is looking like a prosperous and productive year. Our 2013 Consumer Shopping Benchmarks saw some consolidation against the post-GFC trends that we’ve been following for the last few years.

Consumers were a little more relaxed in their shopping behaviour and spend was looking more positive. Whilst we don’t predict a giant upswing in retail spending in the coming year, we do think things are looking better and more settled than they have for a few years.

In this light, we thought we’d kick off with our top retail trends for the forthcoming year:

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1) Poor politics produces parsimony The election is out of the way – thank goodness! Everyone is feeling more settled. Consumers, who tuned out of the political debate some time ago, were none-the-less happy to get past the Federal election. Certain now of the political landscape at the highest level, it feels easier now to make plans and relax a little – not least with a bit of healthy consumption. Not many will go overboard, but spending will be better this year, provided the Coalition can move to a narrative of positivity, and unemployment doesn’t rise too quickly or too high (see below).

2) Security to spend Job security and rising wages for consumers equals good times for retailers. Insecurity and stagnate wages makes for much harder sales work. One of the less talked about reasons for consumer caution has been job insecurity. It’s also helped feed the desire to pay down debt. Again the macro political climate is important and sound economic management a must. Watch this space.

3) Connectivity Will only grow. This is good. As old models fall new opportunities emerge. New models bring new business. Growing business. Permanent connectivity democratised the retail market, shifting the balance of power between retailer and consumer. But it also now provides the spark for consumption and those who leverage it will profit.

4) Connection Face-to-face, personal, informed service. It’s improving and will get better. And, of course, omni-channeling will grow.

5) Fresh is best Consumer caution has been partly driven by fear, but also by boredom and the oversupply of the same things everyone had been buying for years. The breakout categories, most notably personal electronics, thrived because they were exciting and interesting in themselves, and drab offerings in other categories were hidden in their shadows.

6) Green is good For marketers that is. Despite the move away from the carbon tax and carbon trading green still matters to people at a local level. Polls indicate general consensus on climate science and consumers would rather feel part of the solution, especially if it doesn’t cost them anything. Enter marketers. Wrapping promotions in feel-good green themes that provide other benefits such as discounts remains a strong marketing card.

7) Big Brother is watching Big Data will continue to grow as a business strategy, but there will be backlashes from consumers as they become more aware of the extent to which they are being tracked.

8 ) Internationalisation Global retailers will continue to expand, leveraging the scale and scope of their what stores sell viagra operations to thrive in local markets. Australia will welcome more of these retailers who will continue to infiltrate other comparatively-inefficient markets as well as developing economies. The future has a pattern of global operators, niche local businesses, and national chains squeezed on margins.


Challengers for the Retail Strip

As well as our long-standing involvement with the shopping centre industry, Directional Insights also has expertise in researching shopper behaviour at traditional retail strips.

This strip retailing model has been under threat for some time, although it survives, and in some places thrives.

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Anecdotally many consumers recall nostalgic memories of their local strip shopping precincts, where as children they’d be sent on errands, or hung out at the local milk bar. Older consumers claim a preference for the ‘local’ feel and customer service they find. But they don’t vote with their feet.

Where strip retail is in trouble, it’s because shopping centres have catered more effectively and efficiently to consumer needs.

Examining the weaknesses of strip retail tells us a lot about the strengths of shopping centres. Let’s look at six key points of difference: <

1) Anchors: Shopping centres have always vigorously pursued the best retailers. In the early days department stores and supermarkets formed the rocks around which specialty retail was distributed. Discount department stores were included when they emerged as the 1970s most dynamic, and freshest, retail form. Multiplex cinemas and category killers followed later. Services, too, are now central to the shopping centre offer. Without significant traffic generators, retail strips will always struggle for volume.

2) Air-conditioning: Internal, climate controlled environments are cool in summer, warm in winter and sheltered from rain. It makes for easy, pleasant shopping that can’t be easily replicated in outdoor environments.

3) Parking: In an attempt to combat the power of shopping centres, many municipal councils, following an international planning trend, tried introducing pedestrianisation schemes in the 1980s and 1990s. Traffic was barred from main streets which were paved over and landscaped.

Why did these fail? We’re a car driving nation. Pedestrianisation schemes not only removed traffic and parking from the street, they failed to provide any parking nearby.

One of the reasons shopping centres succeeded was because their owners were the only ones building adequate parking stations.

4) Security: Pedestrianisation schemes also suffered from a lack of security. Pleasing environments by day can become, or seem isolated and dangerous after dark. A deserted pedestrian mall with poor lines of visibility and absence of car traffic simply does not feel as safe as a well lit, internalised shopping centre with its own security guards.

5) Amenities: Clean, safe, accessible public toilets and baby change rooms. Need we say more?

6) Management: Shopping centres are run by a centralised management team representing a unified ownership team. They are trained and experienced in the field. With strip retail there are multiple landlords, no cohesive promotional or marketing strategy, no control over tenant mix or leasing strategies, and little joint control over the appearance and presentation of the precinct or of individual retailers.

Retail strips, then, face considerable challenges in a competitive retail environment. None-the-less they can have positive points of difference – we’ll cover these in our next issue of e-directions.

<br> 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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