Published in Philippine Daily Inquirer, Business Features Section, February 13, 2009
The global retail industry forecast is not exactly rosy with a projected deepening recession in advanced economies and an economic slowdown in Developing Asia.
Value, value, value over retail location
When money is tight, consumers start assessing their options. A 2008 Global Nielsen Report conducted in 47 markets including the Philippines reveals how majority of global consumers rate “good value for money” as the primary consideration in buying goods and services followed by a better selection of high quality brands and products. Location placed third.
This implies that brands, products and services are more likely to drive the purchase, with consumers having made up their minds, possibly even before choosing the store location they will make the purchase.
Source: Grocery, Store Choice and Value for Money: A Global Nielsen Report 2008
Surprisingly Filipino shoppers, despite their natural penchant for shopping and private consumption, remain the most avid value seekers. Ninety percent of Filipino shoppers are influenced by their perception of a store’s reputation for good value for money, same with over 80% of Singaporeans, Indonesians, Greeks, Malaysians and Taiwanese.
Source:Grocery, Store Choice and Value for Money: A Global Nielsen Report 2008
What is even more interesting, is how four in ten global consumers including Filipinos take matters in their hands by researching and assessing brands and retailer prices with Turks (84%) leading the roster followed by Filipinos (79%), Brazilians and Poles (78%),Portuguese and Thais (77%).
The pressure is on for retailers and retail landlords
While an accessible location remains important for retail, this has nearly become a commodity with more store formats and stores rising to serve even the smallest population segment. Thus, when consumers think about spending their money particularly in times of economic crisis, they are likely to think about brands, products and services over location. Here are some ways by which retailers and retail landlords can overcome the impending economic slowdown:
Retail landlords must support brands that seriously make an effort to talk to consumers. Gone are the days when products and services rely on their presence in store shelves or leased spaces in malls to attract customers. In times of crisis, retail landlords must collaborate with brands that seriously invest in brand building to forge consumers share of mind and share of space. Brands help bring foot traffic to a retail space with retail presence easily resulting in a sale that mutually benefits the brand owner and retail landlord. Same with independent retailers; retail landlords must choose tenants who are capable of attracting their own foot traffic into their store and consequently, to other mall services and tenants.
Create a perception of value for money in retail. A primary driver for buying is “good value for money”. Thus, retailers and retail landlords must make it conveniently noticeable for shoppers to spot perceived value for money brands when these consumers enter stores or malls. Often, brands with substantial investments in brand building are the same brands with a high incidence of perceived value.
Have a strong portfolio of good value for money brands. Filipino shoppers are certified value seekers. This means that for a store or mall to thrive, it must have a substantial portfolio of good value for money brands. Good value for money and economic brands are not the same. Economic brands rely on selling cheap at all times compromising quality most of the time. Good value for money brands may not be the lowest priced. When it comes to good value for money brands, the satisfaction and benefit of usage a consumer thinks he is getting far outweighs the cost of purchasing the brand.
Invest in brand building. An economic crisis is an opportunity to build a strong brand. Most brand owners become naturally cautious in downtimes. This leaves the field open for more assertive players who believe that even in an economic crisis, brand building must be sustained. The good news is – despite an economic meltdown, it is still far cheaper to build a brand during economic downtimes when there are far less aggressive competitors and more businesses hungry for sales revenues.