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It's All About Having the Right Stuff

The survey, which queried consumers on their actual spending, where they shopped and why, also found that 42% of consumers reported spending more during the 2000 holiday season, while only 29% said they spent less. But with an average of 38 gifts on their shopping lists, where they spent their money was far more dependent on selection -- finding what they wanted -- than on price. Superior selection has become the major driver of customer shopping behavior.

"Many retailers continue to erroneously focus on price -- using sales, discounts and coupons -- as their primary lure to customers,'' said Bob Gordman, president of strategic business planning at Meridian. "Yet selection was named twice as often as price as the reason for spending at a store. And that held true across all retail channels -- discount, midline, department and specialty stores."

"A significant 42 percent of consumers shifted their purchasing to a different store this year, and selection was the reason they cited,'' Gordman continued. "The message that comes through loud and clear is that when the product is right, price is secondary. Right pricing has become a given -- the new battle is about retaining and attracting customers by providing what they want.''

Gordman noted additional findings indicate many retailers failed to meet their customers' expectations for "the right stuff.'' Forty-five percent of shoppers were not impressed by any store they visited, and two-thirds could not name a store that they thought was interesting. And despite the millions of sale coupons run by stores in their advertising, less than one-third of consumers surveyed cited using even one coupon. Further documentation that price is no longer the primary driver is that few customers were willing to move down-channel in their spending. Instead, they tended to buy fewer items if they could not find just what they wanted.

"Today's winners in retailing are those that know their customers and match their merchandise offerings to customer expectations,'' stated Gordman. He pointed to the merchandise selection and customer knowledge employed by both Talbot's and Kohl's as major contributors to their success during the holiday season.

What conclusions can be drawn from the Holiday 2000 experience? Among Meridian's observations are that many retailers have lost sight of their strategies and their customers. They are reacting to their competition and focusing on monthly comp store increases and quarterly results rather than their target customers' interests. Aversion to risk has contributed to bland selection and stale merchandise assortments, rather than aggressive commitments to the "power items'' that drive the business and give customers reason to buy. Success during the critical Holiday selling season -- and in 2001 -- calls for fresh inventory, interesting merchandise choices, and advertising that is creative -- not repetitive and sale-oriented.

"Our study details how and why stores are gaining and losing customers every day. The winners are those gaining more than they lose. Success is driven by knowing exactly which customers you are trying to serve and having a firm grasp on what they expect from you. That's what should dictate a retailer's direction,'' stated Gordman. "That's the essence of having the right stuff in retailing today.''

Meridian conducted the survey of 2000 Holiday Shopping Trends in partnership with Wiese Research Associates, Inc. The national survey was done with a random sample drawn using RDD methodology and was representative by state. The interviews were completed from December 26, 2000 to January 4, 2001. The maximum expected standard error range of 3.5 percentage points at 95% confidence level.

Source: Meridian Inc 01/29/00

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