Moderate sales were reported for furniture, building supplies, and clothing, and reports were weak for Internet retailers, pharmacy and health stores, and auto and auto parts sales, which fell by 2% for February. In addition, retail employment showed strength by shedding only 400 jobs. Overall, retail sales including autos were up 0.3% in February—a 3.9% increase from a year ago.
“The retail industry has customarily been the market gauge by which economic recovery is measured and, as a result, today’s report is certainly welcome news that recovery is underway,” said RILA President Sandy Kennedy.
Retailers now need to consider how to bring customers in now that they’re ready to spend, but it’s not just a matter of pricing or convenience, as indicated by the weak sales figures for Internet retailers. It’s brand, customer relations, and, most importantly, perceived value.
Despite the company’s current troubles, perhaps Toyota is a good company to use as an example. We’ve all heard about the massive recalls Toyota has rolled out in the past few months, but a recent survey by Corporate Research International reveals that most current Toyota customers would still feel comfortable purchasing a car from the automaker in the future.
According to survey results, only 6.5% current Toyota customers would not purchase a car again because of the recalls. The numbers changed greatly when it came to customers that owned other brands of cars, however, More than 50% of Subaru owners said they would not purchase a Toyota.
In addition, 66.4% of respondents who planned to purchase a car in the next five years would still consider buying a Toyota. “Toyota has spent years building loyal customers,” said Mike Mallett, CEO of Corporate Research International. “This is a true testament to the power of customer attachment and the importance of building good relationships with consumers so when trouble hits, your customers stand by you.”
So as the numbers showing shopper behavior continue to roll in with a positive outlook, what should retailers do to take advantage? A report from PricewaterhouseCoopers, LLP (PwC) and Retail Forward entitled “The New Consumer Behavior Paradigm: Permanent or Fleeting?” found that although shoppers are spending, they’re being more deliberate, conscious, and practical about it.
“The recession has tempered the rampant and excessive consumption, giving way to more mindful choices as shoppers increasingly seek out online and mobile coupons, comparison shopping sites, and loyalty and rewards programs,” noted Lisa Feigen Dugal, US retail and consumer practice leader at New York-based PwC. “As consumers become more invested with using these tools in their shopping experience, retailers will need to adapt their strategies to appeal to this new generation of consumers.”
“Although we’re starting to see signs of shoppers getting tired of trading down, they remain cognizant of today’s economic realities and need to balance that with personal desires to reward themselves,” observed Mary Brett Whitfield, SVP at London-based Kantar Retail, part of the Kantar Group of WPP.
“Retailers and suppliers can take advantage of this ‘frugal fatigue’ and offer affordable do-it-yourself alternatives to pricier products,” she continued. “For example, an at-home substitute to an expensive spa treatment or restaurant-quality meal takeout options that replace dining out will resonate with consumers during the post-recession.”