Society Continues to Fragment: The Consumer in 2010

By Al McClain

If you've ever stood in front of the toothpaste section marveling at choices, or killed an hour scanning the available channels on your TV, it's easy to think that all consumer segments and choices are already met. Not so, according to Lois Huff, senior vice president of Retail Forward, who spoke at their recent Retailing 2010 conference.

According to Retail Forward, society will continue to segment into sharply-defined, well-connected, and highly-motivated consumer niches that will no longer be satisfied with universal access to high quality, undifferentiated products. One aspect of this is that with Internet-based connections permeating much of daily life, consumers expect to be able to find what they want, when they want it. And, with increased connectivity, niche interest groups that might never have assembled before are getting together and will effect societal change. This also leads to more extreme and intractable perspectives among these ever-finer niches, which are less willing to consider opinions of non-group members.

As access to cheaper, high quality, more commoditized products increase, retailers and suppliers will have to provide tangible benefits to consumers - "what it does for me."

Consumer expectations will be that most products are high quality and functional, so to stand out manufacturers will have to show tangible benefits that relate to individual consumers and these niche groups. Consumers will have a harder time expressing their individuality, so they'll want products that help them do this. Suppliers will need to increasingly target extremely narrow niches.

We'll also need to understand the aspirations of various age and demographic groups, deal with contradictions, enable consumers to achieve more privilege and exclusivity, and help consumers find high style, which is one way to provide differentiation and command a price premium. Consumers will want more participation and interactivity, which may mean trying new ways to get consumers to try new products, both in-store, and by bringing products to where consumers are. And, "co-creation" or getting consumers involved in actual design of products, stores, marketing, and experiences will be important.

Moderator's Comment: What missed opportunities are there for suppliers and retailers to better connect with consumers?

Marketing campaigns often stimulate consumers' desires for products but by the time the "rubber meets the road" in-store or on location, the consumer expectation is not met as it should be, decreasing sales and repeat business. When is the last time a vacation or shopping experience was as good as it looked in the TV commercial?

This weekend, I was in a brand new Wal-Mart Supercenter, within 20 miles of their headquarters. The store has been open only about 10 days. The enormous store was clean, the produce looked great, and the prices were low, as "always." The only two things it seems they haven't focused on are 1) how to personalize the shopping experience and connect with consumers, beyond the standard greeter and Wal-Mart TV; 2) How to sell high-end goods. For the moment, there is an opportunity for others, while Wal-Mart and other top retailers seem to be still focused on EDLP and supply chain efficiency, to form deeper and stronger connections with shoppers, and offer products with more personalized features. - Al McClain - Moderator