Every Monday, I compile a feature called “Retail Trends You Should Know About.” So, as 2011 draws to a close, I thought I would list the year’s main retail trends that you all should know about:
Retail is very much alive: As the near-riots for Missoni at Target proved earlier this year, while Americans may have lost the ability to shop as they once did, they have hardly lost the taste for it. The NRF, in fact, just upgraded its holiday forecast. This still isn’t 2006. But it’s not 2009 either.
Malls are resilient: Big boxes and lifestyle centers have their fans. But in the end, Americans still love their malls.
Discounts, discounts, discounts: One reason people may be shopping more: There are deals out there! Price-off sales and promotions have become so common that consumers now expect them: According to Business Insider, 64 percent of shoppers say they need discounts of between 30 percent and 50 percent in order to justify a purchase. (That has increased from 2010, and, believe it or not, the dog days of 2009.) And this is impacting all strata of consumers: Some 90 percent of affluent consumers said they go out of their way to find the best price. In addition, 25 percent of upscale buyers said that discounting didn’t diminish their opinion of a luxury brand. And 19 percent said it improved it!
More self-gifting: According to the National Retail Federation, the amount of people who are buying things for themselves this holiday is at an all-time high. This would seem to be a sign of recovery, but it isn’t really; the NRF attributes it to retailers convincing consumers prices are lower during the holidays.
The bifurcated market: The high-end is doing pretty well. Jewelers are targeting the low-end. But the middle remains pretty weak, and the fading power of the middle class might be an enduring feature of the “new normal”:
“The rich seem to be on the road to recovery,” says Emmanuel Saez, an economist at Berkeley, while those in the middle, especially those who’ve lost their jobs, “might be permanently hit.”
Even those who aren’t hit are bifurcating their buying. A recent McKinsey study said:
Consumers are increasingly “straddling” their spending habits, going for value on the basics and paying a premium for those categories and brands that demonstrate differentiation. Considering this, manufacturers and retailers alike need to develop a portfolio strategy that creates a clear good-better-best offering with particular emphasis on the opening price point and value segment as well as the premium offering.
Non-conspicuous consumption: People are still buying expensive things. But they are less likely to flaunt them, and many not even want people to know about them. (Exhibit A: Newt Gingrich and Tiffany.) As one branding expert put it: “The economy has dictated that it’s no longer fashionable to make sure everyone knows what brand you carry or wear from meters away.”
Mobile: Obviously, the impact of smartphones has the potential to become a game-changer, both because they allow products to be purchased from anywhere, and also because they allow greater comparison-shopping. (Witness Amazon’s new controversial price comparison app.)
Will this impact the jewelry market? You wouldn’t think so. And yet 25 percent of Blue Nile’s traffic now comes from its app. One consumer even bought a $40.000 diamond from a ski lift. In fact, one survey says that 45 percent of 18- to 34-year old consumers who own a smartphone use it to purchase products, sometimes several times a week. And unlike the other trends above, which might change with the economy, this one isn’t going anywhere.
I will tackle the main trends specific to retail jewelry in another post.