Author Archives: spapich

Just lived through another black Friday…

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We’ve just lived through another black Friday and the start of the holiday “shopping season.” Tomorrow is cyber Monday. If you are like 99% of the population, you are shopping like it’s a second full-time job, and it seems the point is to save a ton of money.

If you are a consumer goods brand, then maybe this is the time of year you count on to sell everything in your distribution centers. And how have you strategized to compete? Unfortunately, but most likely, you are now dropping your prices (and throwing in shipping) to attract every shopper you can. Of course, almost every brand (and retailer) is also flipping the same switch right now by selling everything cheap… and what a legacy it has become. Yes, maybe you will bolster your bottom line, but you have branded yourself now as an organization that constructs some kind of strategy to uniquely position yourself 11 months of the year, and now you holler at the fat part of the bell curve and compete on price when you hit the home stretch. All things to all people, because who can resist a bargain? In truth, anyone can compete on price, and even if you hit plan this season, you know you will have to resort to this same routine over and over to make your numbers. You have become the kind of brand that, despite all the innovation and product performance and dignity and coolness you claim to bring to the market, you slash prices to get the sales and try to hit a growth target. And that is now your “position” in the mind of the market. Your competition, by the way, can do the same thing and beat you senseless next year — it’s just discounting. So, what is it you believe your brand stands for, other than selling stuff cheap?

On the other hand, maybe you are one of the very few brands that is NOT urging consumers to run from the Thanksgiving table to shop, and is NOT slashing prices for black Friday and cyber Monday. Thank you. Hopefully that means you stand for something other than commoditization and price battles. You have a product or a service that may not be for everyone, but must be worth your asking price, plus a message that you stick to, because you mean it: concern for the climate, social justice, watch-dogging the politicians, giving back to the community, or just giving a break to someone who needs helping hand in the first place. Whatever it is, it costs you something, which we all know is not a shortcut to current quarter profitability. But there has never been a time when genuinely standing up for something decent has ever meant more than it does to consumers right now. As a brand, you are committed to staying true to what you do and why you do it, rather than making double-digit growth no matter what it takes. You take the confident position of a unique, meaningful brand that is worth the price even during the holiday shopping massacre, and you will be rewarded – possibly this holiday season, or maybe not, but for damn sure in the long run. And ultimately you will take market share because (a) more and more consumers want to be part of something that matters, and (b) you are impacting how people think.

Keep up the hard work – brands like yours are the ones that really matter, and we need people like you to make the change happen.

 

 

Let’s go out on a limb

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Let’s go out on a limb regarding an aspect of consumer behavior.

Despite volatility since early 2018, the equity markets are valued at near historical highs; home prices have risen dramatically in recent years; unemployment is reported to be the lowest in a decade. Business is getting the biggest tax break we have ever seen, and supposedly so are quite a few individuals.

So, why are US economic growth projections sitting in the 1-3% range? And why are so many public companies setting 2018 guidance at low single-digit growth for Wall Street?

(Here is where we go out on the limb.) In part, it’s impacted by consumers simply not wanting as much stuff. There are exceptions – everyone seems to want Patagonia and Adidas, which are both are growing magnificently. And beauty products are up year over year, and smart electronics categories have grown. But those are the outliers. None of this, by the way, is about consumers transitioning from physical stores to online.

Think about this. The generation that bought McMansions with huge walk-in closets and 3 car garages, and then proceeded to fill every nook and cranny with furniture and possessions, is wrapping up the bulk of the discretionary spending that they will ever do. Long term care is the biggest category coming for Boomers.

But consumers aged 25-40 don’t want so much stuff. They are why we now have tiny homes and car sharing. Many are urbanizing and living in smaller places, with smaller closets, no yard to mow, and maybe no garage. Frugality is cool, and re-purposed goods are cool. From now on, companies that make and sell physical goods will have to compete with each other for slices of an overall pie that is essentially done growing for the foreseeable future.

Two exceptions: (1) brands and sellers that take strong positions on social issues and incorporate that into their brand stories will do well, of course at the expense of their competition; and (2) brands selling products that power the “experience” economy – that means travel, recreation, events, social sharing – will do well.

That is our big picture view. Thoughts anyone?