What’s New July-August 2010

It’s all about LEEDing Retail

We all know that the drivers of retail start with location and retail mix. If it is close to where I live then I will shop there, and if it has the right retail mix, I am even more likely to shop there. According to Dr. David Huff of the University of Texas, the key theory to shopping centre attraction is location and centre size. The closer I live to a centre the more likely I am to visit, and the larger the centre the stronger the attraction. It is all very logical. I love shopping at Chadstone Shopping Centre but I live in Sydney….that makes visiting weekly very difficult…or very expensive!

But in today’s modern society other factors beyond location and centre size and mix are now coming into play. These other factors are also quite logical. I am time poor, what are my chances of getting a car park – a key driver. I have a young baby, what is the quality and cleanliness of their parents’ room. I have a four wheel drive with roof racks – can I make it into the car park without ripping them off? And so it goes on.

Developing shopping centres around logical benefits is very important, having the right retail mix -a butcher, a supermarket, a discount department store, supporting specialty retail are all obvious issues in shopping centre design and management. The logical theory largely holds true for the primary trade area, and the secondary trade area accounting for around seventy percent of trade..… location and retail mix are the key drivers most of the time. But what about the thirty percent or so of customers from beyond the trade area? What about the other times for the main trade area when logic goes out the window?

I would argue that there are two below the line issues at play, the emotional and the egotistical drivers of retail. These are often the factors that drive Beyond Trade Area trade…and are often very individual to a trade area.

So what is an emotional driver of retail? An emotional driver is one where the logical choice of going to the closest centre with the right retail mix to meet my shopping needs is overtaken by an emotive decision to go elsewhere. Take the young mother shopping with her two children; her logical drivers will be parents with pram parking, clean baby change facilities and the opportunity of a play area where she can get five minutes respite in her day. Two centres locally may well offer this. The emotional driver is that one centre has a stronger feeling of a safe community, it is a place where she sees other mothers congregate, it is the place where maybe she remembers enjoying herself as a child, it is a place she knows her children like to visit.

Sometimes the emotional driver will be personal survival. The wife needing or wanting to go shopping but knowing the partner will protest. The emotional survival strategy will be to choose a location that (a) is really close and quick, or (b) has a male crèche where he can be parked for an hour like JB HiFi!

Another example of an emotional driver in survival mode is needing to buy the teenage son shoes, who probably doesn’t want new shoes and doesn’t want to be seen with you. The closest centre with a shoe shop may not do the job – going beyond the usual three kilometres trip to the local centre may need to be re-thought. In this case again surviving the experience can mean enticing the teenager with an experience he will embrace which is happening beyond the usual shopping destination. For example, the centre has a Games Workshop he can chill in for an hour while you keep shopping, or a store where a friend works he can say hi to.

Emotional drivers can also solidify a centre’s trade area dominance, particularly with older customers. Two centres may be within equal distance for a customer in his sixties, both have supermarkets, a butcher, baker and candle stick maker. But one centre has a butcher who has been there for thirty years who know him by name and offers a 5% seniors discount -this butcher has a heritage brand valued by others. This same centre has a seniors club who meet every Tuesday and this centre is where his daughter got her first job.

On a larger scale, emotional drivers can be defined by the local community and therefore project the values of that community outwards. Think about the shopping centres or retail space you deal with – what are the emotional drivers of that community? Are they positive or negative drivers and what impact is your retail space having on them? What emotion does your retail space evoke in your key customer segments – would they say you were a positive or negative impact? What can you do to improve on your current position aesthetically, commercially, functionally?

Egotistical drivers come from our ego. This can become an overriding driver against all else. This driver is tied up in how a shopping centre I choose to visit reflects on me. Most of us love the place that we choose to live. How many times have you heard a place described as God’s country – the northern beaches, the Sutherland Shire, FNQ, Perth.

What this says is that generally people love where they live, and when they have visitors to their “place” they want to showcase where they live and how they choose to live. One of the key ways women do this is through retail showcasing. The choice of shopping centre yesterday was quite logical, easy to get in and out of, shops that I needed to visit, quick trip from my house.

But today this same shopper has a friend from over the bridge coming to visit, and they are going shopping together. The choice of shopping location now becomes egotistical. My choice of centre now reflects on who I am, whether I am stylish, eclectic, fashion forward, will drive the choice of centre. The egotistical driver at play here is how my retail choice reflects on me. That choice can often drive me away from what is close and what is big, or it can also drive me to it. What would your key customers say about how your centre or retail space reflects on them? Would they be happy to bring someone from out of area to your location?

Whilst the logic of shopping centre design, mix and management is the main territory we work within as an industry, further understanding the emotional and egotistical drivers to visitation is key to maximizing the trade area and beyond visitation to your shopping centre. Along with understanding the logical drivers for customers to your retail space, keeping a gauge on the mind and mood of your trade area through assessing their emotional and egotistical drivers is imperative for long term asset health.

Where do we go after stainless steel appliances and Caesarstone?

Residential property development has certainly become sophisticated in terms of the range of product for multiple lifestages, each one concentrates on a different lifestyle promise. This could be the village lifestyle for first home buyers, the community appeal for families and the leisure offer for retirees or empty nesters.

For the best part of a decade the marketing language has focused on the design materials or appliance brands. Whilst residential product has become extremely sophisticated with the inclusion of Euro appliances, CaesarStone, seamless indoor outdoor entertaining areas this has also become the norm rather than a competitive advantage. Naturally energy efficient designs will continue to have a role in design and such benefits will be exploited by the marketers.

But where does product innovation come from in the future. We need to rely on Architects and Designers to drive some of that innovation of course. Another source of innovation should be the potential buyers themselves, they should be at the heart of the design and planning process.

We should be aiming to design houses that express the values of individuals and communities. We know there is a rational checklist that includes criteria such as proximity to transport, shops and services, but what sort of life do they really want to be living. Perhaps we should be asking the question ‘what do they want their home to say about them?’. Collecting insights on the emotional drivers can only enhance the design brief and inspire architects and designers.

Directional Insights through its innovative qualitative techniques contributes to clients’ understanding of the logical, emotional and egotistical drivers of residential environments. If you would like to discuss this further please feel free to call Kylie Newcombe, Principal Consultant on 02 9418 6644 or email kylie@directional.com.au.

What do social networking and nostalgia have in common?

Why customers want to see yesterday in a new way…
Increasingly during customer discussion groups run by Directional Insights across the country, we hear customers reminiscing about marketing activities they used to enjoy when in shopping centres when they were young; activities such as face painting, children’s shows, school performances, fashion parades, talent quests, free carousel rides and train rides around the shopping centre.

Basically, what they are talking about is the industry label of the dog and pony show. But why? In a more sophisticated technologically driven society why aren’t these customers saying I want hologram catalogues or on-line fashion parades or DVD catalogues by direct mail. Why are they going back to what they enjoyed in their youth? Well it all revolves around nostalgia and the history of shopping centres.

As life moves at a fast pace, customers increasingly yearn for yesteryear. No pleasures are greater than those of an idealised past. Nostalgia is a natural stabiliser in a changing world. Mid lifers undergo a phenomenal amount of change, but our past does not change. Nostalgia brings the meaning of a static past to a fluctuating present. It helps give direction and hope to our future. And so it is with customers. The 40 year old customers of today were children when shopping centre launchers were a dime a dozen and a clown cost $5 a day. In research we have undertaken these high spending customers yearn to be able to given their children the same experience they remember having in shopping centres.

The baby boomers closely followed by Gen X are currently the biggest spenders in shopping centres. 40-49 years olds currently spend the most per head whilst in a shopping centre. These customers tend to be Female, with children still at home, either young children, or independent children who refuse to leave.

These customers often reminisce very fondly about the activities they enjoyed when they were young, forty years ago, which places us in the 1960-1970s, when shopping centres were also very young.

The first shopping centres to be developed in the late 1950s and early 60s were Chermside Shopping Centre in Brisbane, Top Ryde in Sydney and Chadstone Shopping Centre in Melbourne. Following this, there was an explosion of the suburban shopping centre throughout metropolitan Australia. When each of these shopping centres opened there was a large fanfare, ribbon cutting and you guessed it, dog and pony shows to entertain the children and adults. At each shopping centre opening, of which there were many every year, each shopping centre would try to out do the other. The children that were entertained during this period are the Baby Boomers and Gen Xers of today – with all the money today!

Watching the Gruen Transfer on the ABC last week, they also mentioned the increased use of Nostalgia in advertising since Sept 11 with a rise again since the GFC. I think it is fair to say that building nostalgia back into shopping centre marketing has some fundamental benefits. It does make Baby Boomers and Generation Xs feel good about shopping centres because they remember what they used to really enjoy about shopping centres when they were young. It also allows them to re-live their childhood by giving their children the opportunity to experience some of the wonderful things they experienced in shopping centres. And we know the more a customer likes a centre the more on average they spend there.

Rather than dismissing nostalgic marketing at centres, this type of marketing allows customer to put their halos on and remember a better time when life was simpler and joyous and they were ten years of age.

But nostalgic marketing is not a simple repeat of yesteryear but a reinvention. Today’s fashion parade may be announced as a social networking event using flash-mobbing where customers are invited to turn-up in their favourite outfit and be in the parade themselves. It is not about repeating the 1980s Smiths Chips Gobbledok ad but allowing the character to relive in a new form.

Nostalgic marketing like the fashion parade, the buskers in the centre, the cooking demonstrations, local photographic historical shows etc are marketing activities that are worth reconsidering in your marketing line up, to further entice and entertain Baby Boomers and Generation Xs and their accompanying children – but the execution and communication need be in today’s currency.

Source: google images

Certainly, this is not to say these activities should be at the exclusion of all others, but rather they should be included, where appropriate, into the marketers’ business plan of building customer goodwill with the biggest spenders. Television has turned Solid Gold into Australian Idol, what can shopping centres marketers do with the fashion parade and cooking demonstration?

We would love to hear the views of Marketing Managers out there today on whether you agree or disagree, please feel free to drop us a line at info@directional.com.au

Green Reveal Update

Source: Planet Ark.

In the May – June edition of eDirections we discussed the work we have undertaken with Planet Ark on their introduction of Carbon Reduction Labelling in Australia.

But in the meantime Planet Ark has just announced that Aldi has become the first Australian company to join Planet Ark’s Carbon Reduction Label Program – read more at this link http://www.foodweek.com.au/Default.aspx?tabid=53&ID=7532

The Buzz

Retail World 2010 Melbourne

The Retail World Conference was held in mid June in Melbourne. It opened with Bob Every Chairman of Wesfarmers talking about Coles, the Past, the Present and the Future and included two days of some retailing giants talking about retailing in Australia and Overseas including The Just Group, Luxocttica, Harvey Norman, Crate and Barrel and Woolworths to name but a few.
I thought I would share some of the collective key take outs that I thought were of interest. Overall the main themes of the conference we directed towards being Customer Centric, Living Values, Innovation, Value Propositions and embracing Technology.

Some retailers discussed head office as now being a store support centre, supporting the stores. Start with the customer and put head office last.
Customer fulfilment not category fulfilment within retail stores. Identify who your customer type is and provide that customer type with all their needs within your retailing category.
Many spoke about putting customers first. How do you increase market share “put your customer learning into action quicker”. Listen, hear your customer, and then change
Cultural imperatives around retail operations was also a big theme, identifying them and living them. “Culture is important to any company’s success”
Continued investment in capital to drive strong store returns
Gift cards providing over 200% return for some retailers, a $100 gift card spend in store would be accompanied by an additional $70 to $230 spend.
A strong staff discount ensured staff wore your merchandise and advertised in-store the range available
Making retailing exciting with great merchandising were common themes as seen as areas of opportunity in Australia’s market place
Giving back to the community was also a common theme
Embrace the digital future – Increasing use and awareness of social media audiences, being aware rather than trying to control seemed to be the primary lesson
Innovation takes time, the Smiggle Soccer Ball which has been a huge success took 6 months to get right – it takes time and planning to deliver innovation.
Redefine and reinvigorate mature brands
Develop entirely new growth paths for your brands
Having a relationship with your customers that is real is a competitive advantage that can never be copied!
If customers have the experience that warrants the price, then customers will pay the price
If you are in the commodity business someone else is always going to have it cheaper – give the customer value not just cheap
Don’t just know what your customers do, know WHY they do it
Make the internet work for you in every respect, sales, social networking, customer contact
Authenticity is critical in being a great retailer.
And finally the ringing cash register is the applause that you are doing a good job as a retailer!

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.