Monday, 20 June 2011

Affluent Consumers

The following appeared in JCK Online today.  Please give it a quick read, and then I have a few reflections...

More Affluent Consumers Shopping at Discounters

By JCK Staff
Posted on June 20, 2011

A survey released by Unity Marketing June 20 showed wealthy consumers were more likely to shop at discounters like Target than at high-end department stores.
According to the survey, more ultra-affluent shoppers, defined as those with incomes of $250,000 and above, said they shopped at Target (39.5 percent), Macy’s (34 percent), and J.C. Penney (22.4 percent), than said they shopped at Neiman Marcus (20.1 percent) or Bloomingdales (19.4 percent). 
Affluent shoppers “are just as eager as shoppers with less disposable income to find good quality at reasonable prices,” said a Unity Marketing statement. “That’s why they shop at discounters like Target, Kohl’s, Costco and Wal-Mart, just like everybody else.”
Unity Marketing president Pam Danziger, said luxury shoppers have embraced a new “value orientation.”
Luxury products today must “deliver a meaningful return as measured in greater pleasure, comfort, superior performance, and longevity of wear and use,” Danziger said. “If the product doesn't measure up, [affluent consumers] won't spend the money; rather they will trade down to a cheaper, yet acceptable alternative.”
Danziger said high-end stores like Neiman Marcus have to understand that discounters are increasingly becoming their competitors.
“With Apple's retail innovator Ron Johnson joining J.C. Penney as CEO later this year, I expect to see exciting changes emerging from Penney's, particularly in the area of the customer's shopping experience,” she added.

This is an important sign of the times. Many retailers I know are focusing on "branding" their store either via the lines they carry; or how they advertise. What is branding? It's what you do to achieve the "X-factor" that makes you the cool place to buy jewellery from.

In mathematical equations "X" is an unknown, and mathematicians do complex work to "solve for X." Jewellers are doing complex work to "solve for X" in the problem what will make consumers choose me over my competitors. While many believe that X = prestige, the JCK article is suggesting that X = the perception of a good deal. Is X a constant or a variable?

The answer is this:

"X" is not a single thing that will trigger a viral response to your products and services; rather it's a number of things done consistently well that make your target audience conclude that "I'd have to be a complete moron to buy from anyone else, no matter what the price."  The value question is not a matter of a discounted price.

Value is the feeling that a person gets from weighing all of the factors and making their best possible decision.  Price is only one small factor for most consumers.  Just because the JCK article says that affluent shoppers are looking for discounts, don't think that price is the only way to earn their business.  

Value is justified and proven through salesmanship.  If you can help your client to answer all of the questions they have about a purchase and identify the key factors that they equate with value, then you're on your way to making the sale.  If you know anything about your product or your competitors product and believe that discounting is the best way to make people buy, then in the words of Donald Trump, "your fired."

If you're building a brand around an amazing client experience and you're increasing your product knowledge and salesmanship, then don't even give this dumb article a second thought.  Keep on that track.

If you want a glorious future in this industry there are two more things you need to do.  One is to focus your current energy on product that has a future.  In other words, enjoy the popularity of current trends, but unless they'll see you retired in a year, you'd better think about how you'll be selling diamond and gold jewellery 5, 10 and 20 years from now.  

The second is to learn how to be relevant to a new breed of consumer who think about material goods differently and who have completely new ways to shop for them.  Keep your eyes on Road Reflections Blog to learn more about these two aspects that are critical to your future.

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