Monday, October 18

Recovering Cautiously: Consumers Test The Waters

Retail StudyAs some companies are slowly thawing pay freezes and even considering the addition of new employees, the Retail Industry Leaders Association (RILA) says retail sales climbed higher in September. This is the third consecutive month, with slight increases spread across nearly all segments.

The uptick is slight, with an increase of 0.6 percent over August sales and 7.3 percent over September 2009. Retail sales (excluding auto sales) were up 0.4 percent over the previous month and 5.4 percent over August 2009. The largest increase over August came from electronics and appliance retailers. Sales increased by 1.5 percent.

Why Electronics And Appliances Continue To Rise.

Unlike clothing stores, which bolstered their sales in August with back-to-school shoppers (and dropped in September), electronics represents an industry where innovation continues to propel the industry forward. In the last few months, technological improvements seem to capture all the attention.

Appliances aren't much different. However, in addition to innovations that promise to be more environmentally friendly, energy conscious, and cause less wear on clothing, the industry and retailers have worked hard on marketing rebates, one-time sales, and extended credit (where customers don't have to pay interest for six or twelve months). These approaches tend to bolster immediate sales without devaluing products.

Consumer Awareness Reveals Which Companies Do Better.

When you look across various industries at market performance, the top performing companies have one thing in common. They appear to be listening to consumers and either evolving the product to add value (innovation) or better communicating what they offer (credibility).

Companies that rely on discounts without added value or expertise will continue to struggle. Even while announcing modestly promising news, RILA was cautious. The economy has been sluggish for the past three years, with many businesses holding off hiring until new rules and regulations are fully understood.

"Every aspect of the economy, particularly those industries reliant on consumer spending, remains challenged by the fact that nearly 15 million Americans are unemployed and millions more are underemployed," said RILA President Sandy Kennedy. "Without a meaningful improvement in the job market, retail sales gains will be sluggish and hard won."

Again, for marketers, those hard won sales seem to be tied to innovations and better services. If you cannot offer a more innovative product, then demonstrating that you care about the consumer (market knowledge) can go a long way. Simply put, beyond innovations, customers are wondering who they can trust.
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