Last holiday season I coined the term “surgical shopping” to describe the highly precise way many consumers were purchasing. While the panic of late 2008 and early 2009 subsided, consumers were only gradually opening their wallets, focusing primarily on needs vs. wants and often trading down to brands that gave very clear bang for the buck. By the time the numbers were in for the 4th quarter, it was clear that business was better, but not particularly good.
As an economic recovery struggles to gain traction, this “surgical shopping” behavior remains rampant, and in my opinion is not likely to change any time soon.
This behavior is evident on the lower end of the market, as private labels (or more accurately “private brands”) gain market share. And it’s apparent on the higher end, as accessible luxury brands such as Coach, Nordstrom and J. Crew beat their more exclusive and expensive rivals. Even at the absolute luxury tier, brands like Louis Vuitton, Gucci and Hermes outpace the competition as they emphasize their heritage of investment quality craftsmanship to win over flash in the pan, mostly pure image brands.
This is now the Hangover Market. Waking from the intoxication of too much marketing and societal hooch, consumers are now shaking off the cobwebs and dry mouth of excessive, superficial spending. And while it’s always difficult to predict future consumer behavior, many consumers are not going back to their old reckless spending habits. For some, this will be out of economic necessity. For others, this will be values based, as they become more discerning about the quantity of what they buy and the price they pay for certain items.
So what does this mean for business leaders and brand stewards?
Tangible, obvious value wins.
Being remarkable wins.