Value, Customer Connections Highlighted in Nielsen Webinar
NEW YORK -- Retailers that want to stand their ground and even grow in 2012 will need to focus hard on understanding their target consumers and their new purchasing habits, according to a recent Nielsen webinar. James Russo, vice president of global consumer insights, hosted "What's In Store: 2012" and offered key statistics and insights into the mindset of post-recession consumers.
The first important thing to keep in mind is that while the recession officially ended in 2009, 90 percent of U.S. consumers still believe we are in one, said Russo. In 2011, markets and consumers were driven by uncertainty, with housing prices, equity and labor markets, fuel costs and inflation all acting as major influences.
In 2012, these concerns still exist, but different demographic groups are being affected at different levels. U.S. Department of Labor statistics from November 2011 show certain groups have been affected much more strongly than others when divided into categories of race/ethnicity, education level, age group and gender. Retailers need to keep these different levels of economic difficulties in mind when reaching out to consumers.
"Ultimately, the question becomes: Where are my stores located? Who are buying our products? Who are the consumers that am I trying to reach?" Russo explained.
Retailers should focus on the "new normal," he advised. Today's consumer is focused and pragmatic, and needs to be analyzed in order to figure out what they're looking for. While circumstances are improving, they're not back to pre-recession levels. "Consumer confidence does make a difference," said Russo.
With no dramatic consumer changes in 2011 and pragmatic purchasing behavior expected to continue this year, the most successful businesses will be those that seek to innovate and communicate with their target market. "To understand this notion of what value means to consumers is really important," said Russo, who listed Nielsen's five keys to growth in 2012:
• REACH: An increasingly polarized consumer.
• LEVERAGE: Redefinition of value.
• ALIGN: With consumer need states for ad effectiveness.
• ENGAGE: The connected consumer in ways they trust.
• TARGET: Economically powerful consumer segments.
To make the most of these keys, retailers must evaluate their customers and target them appropriately. For consumers who spend less, the question is how to get them into the store; for more affluent consumers, the question is how to get them to spend more per visit, according to Russo.
The notion of value itself must be redefined as retailers consider the way their brand resonates emotionally, something that should not be underestimated. "Value is not about price," he said. "It's about the balance between price and benefits."
When it comes to advertising, there are a number of ways retailers can be successful. Humorous ads have consistently resonated with viewers during the last five years; people always like to laugh, noted Russo. The increasingly strong performance of narrative and sentimental ads since 2006 suggests a nostalgic interest in better times, while ads that focus primarily on prices and product features do not resonate as strongly with consumers even in difficult economic times. Viewers respond best to ads that make a connection, Nielsen found.
A possible goal for retailers should be to attract one new customer per day, Russo suggested as the webinar drew to a close. The world is growing as the population does, but it is also getting smaller as people find more ways of communicating their experiences with one another, he said.
He noted that social media has become an ever-stronger method of communication, with the average Facebook user having 130 friends. Using this tool to reach out to consumers is just one step retailers should take in 2012. The key is to reach consumers in flexible ways.