The Great Recession is Over, Sort of...
While we seem to be past the worst of the Great Recession, for now at least, we keep getting conflicting signals. For example, the Dow was at its highest level in 17 months yesterday, while existing home sales declined for the third straight month in February.
At the IRI Summit 2010 in San Antonio, Dr. Romesh Wadhwani, chairman of the newly renamed SymphonyIRI Group, said marketers can no longer take for granted that brands will be strong, price increases will be possible, and promotions will be effective. He sees the next few years as an age where consumers will be thrifty and affordability will be an issue. He also said that convenience has been overtaken by value, as the number of shopping trips taken in search of value was up by six percent in 2009, with a similar increase predicted for 2010.
Meanwhile, the number of stores visited per month has nearly doubled, according to Dr. Wadhwani, and the percentage of shoppers making lists has grown from 50 percent to 83 percent over the past year. One interesting conclusion that Dr. Wadhwani draws is that the "first moment of truth" is no longer in the store but in the home, where shopping lists are made.
So, what's a marketer to do in this changing environment? Dr. Wadhwani suggests the need to develop better consumer insights - faster - and integrate their use throughout the organization. He says that companies have relied too much on looking in the rear view mirror and that now they need to develop better foresight, so they can respond to trends that are about to happen. Of course, SymphonyIRI (a RetailWire sponsor) has tools to help manufacturers and retailers do that.
Dr. Wadhwani cited as unexpected happenings for 2009 the fact that low income boomer shoppers spent 12 percent more in 2009, while retirees spent seven percent more. For 2010, he expects dollars per trip in 2010 to be up three to five percent. He mentioned that manufacturers and retailers who are able to develop the most granular insights the quickest will be best able to detect trends like these in advance and be proactive in response.
Dr. Wadhwani also suggested that manufacturers focus more on consumers and shoppers, which he says are the same people at different parts of the day, versus being brand and category centric. Another idea is to think less about "share of wallet" and focus more on "share of occasion," such as sports weekends, holidays, days of the week, etc. And, he advocates strategic segmentation of consumers based on health stage, life stage, etc. Sooner rather than later, Dr. Wadhwani sees targeted marketing getting down to the individual household level, or at the very least down to a very small cluster of homes.
Other suggested changes include renaming market research departments as business insights, or something similar, because he feels the former name creates too much of a silo and ensures that the information these departments produce will not be given proper attention. Also, he suggested reallocating trade spend, diverting at least some portion of resources away from store promotions into direct response, to reach consumers when they are first organizing their shopping trips.
Discussion Questions: Do you feel that manufacturers and retailers are working fast enough on developing foresight, as opposed to insights? How do you think the experience of living through this recession has changed the ways manufacturers and retailers are making use of business insights?