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HomeCover Story
After a Year of Change . . .
A Year of Balance
By
Marshal Cohen,
Chief Industry Analyst
Whatever happened to creating new and exciting merchandise that the consumer just had to have? After interviewing hundreds of consumers all over the country during the 2008 pre-holiday period, the number-one thing that struck me as odd (and from very early on) was that when consumers of all ages were asked, "What do you want this holiday?” they had a very hard time coming up with an answer.
One six-year-old boy who was shopping with his mom said he hadn’t even made a list for Santa – he didn’t know what he wanted that he didn’t already have. Right then, one thing became clear: in 2009, particularly when Holiday 2009 comes around, we must deliver products that are compelling. There was so little new and exciting merchandise in 2008 that even with the record-breaking discounts offered this holiday season, there was no motivation to buy.
To get retail moving again – and this applies to both retailers and manufacturers – we must realize that no matter how tempting it is to be conservative and pull back on everything – like the new and untested, or even the things that seem a bit risky – that is not the way to go. If we head down this path and get “risk-averse” we will succumb to an even greater consumer malaise.
If you are not willing to innovate, to keep injecting “newness” and technology into the mix, you will end up with what I call “basic sales.” Those are the sales that keep the consumer coming back to buy your product based on necessity and/or replenishment. Basic sales may sustain volume, but they won’t necessarily lead to growth. Where is the opportunity for growth? Real growth, the growth that so many have seen for so long, was coming from the passionate purchase or impulse purchase. These are the must-have products – the ones consumers simply can’t live without.
That was the missing ingredient for 2008. It had better be reintroduced in 2009, or we will have an even tougher year than we did last year. This will require a big commitment to development, to product and product merchandising, to marketing and advertising. It’s about finding the right balance. We must identify the right balance of a basic and conservative posture, mixed with an injection of the new and exciting.
Last year was a year of change – including electing a new President. This year will be the year of balance. This is the year to find the right balance for your business. The right balance of the lean cost efficiencies with proper risks. The right balance of the classic, staple items in your business, side-by-side with the right mix of new and exciting items. The right balance of advertising that encourages consumers to buy on sale, as they now expect, and also promotes the “must-have” nature of your product.
How can someone live without your product? That should be the question you ask yourself in 2009, and the one you should keep asking consumers. Sure, discounts will be in play, early and often, but it’s time to find ways to wean the consumer off of them. A steady diet of discounts will lead to another year of diminished growth and lost profit margins. Get that balance right, and find the right mix of value-centric and compelling product. Then make the right moves to get your business growing again. Your future depends on it.
To learn more about how NPD can help your company anticipate and respond to economic challenges, contact Charles Camaroto at 866-444-1411 (+1-516-625-2311 outside the U.S.), or email contactnpd@npd.com .