The new shopping; Consumption arousal

By Alex May

If there is one thing more predictable than eating too much in the coming weeks, it will be that hundreds of thousands of people will open their wallets for the sales, which start on December 27.
But with retailers offering discounts throughout November and December, will the post-Christmas sales offer the same bargains they once used to?
Yes, yes and yes is the resounding answer from retailers and economists.
Discounts of up to 20 per cent off categories like toys, electrical, shoes and clothes have been common from a range of retailers in the lead up to Christmas.
“Discounting in the lead-up to Christmas does not diminish that the day we open after Christmas will be the biggest trading day of the year,” says Cate Daniels, regional general manager of David Jones.
Access Economics director and economist Chris Richardson expects the 2004 end-of-year sales to offer “the deepest discounting we have yet seen”.
As retailers battle to get time-poor customers into stores, discounting and sales have become more than just a way to clear the floors for next season’s stock.
Myers corporate affairs manager John Gillman says the traditional stocktake sale still offers the year’s best bargains across all categories, as well as extra deals to ensure customers remember the store.
“The post-Christmas sales are a combination of genuine clearance and part ‘engineered buying’ where we generate a great offer for the customer to get them through the door,” he says.
“We will be expecting 200,000 people in our Sydney city store on December 27.”

THE NEW JARGON

A whole new lexicon of jargon has developed to describe our passion for shopping.
Sales, discounts and bargains are only half the story when it comes to the reasons we actually shop.
Desire, consumption arousal, entertainment and, yes, retail therapy are all other reasons humans like to spend money.
Ross Honeywill, director of a think tank called Centre for Customer Strategy, says the current climate of social and economic certainty has fostered “tertiary consumption” amongst Australians.
“We are beyond satisfying basic demands and we have moved to a tertiary level where consumption actually becomes leisure,” he says.
“Even the stores that appear to be for basic needs are really about leisure.”
Honeywill says Bunnings might appear to be a giant warehouse that sells hardware, but it is actually selling the experience of do-it-yourself.
“DIY for these consumers is not about saving money or doing it yourself, it’s actually therapy,” he says.
“These consumers work really hard and they go to Bunnings to do something themselves, knowing full well they may have to pay a tradesman to fix it later.
“They get an experience out of it – they get some therapy.”

SHOPPING IN A WAREHOUSE

Demographer and KPMG partner Bernard Salt says the rise of big box retailers like Harvey Norman, Freedom, IKEA, Bunnings and Officeworks has changed the retail landscape in Australia.
“What you have is the California model of shopping where you have a big warehouse on a main arterial road rather than a high street you can walk to,” he says.
“You can see IKEA doing that with their new store at Rhodes which is actually about ultimately having just one store that can service an entire city rather than a chain of stores.”
IKEA Homebush Bay store manager Andreas Petersson says the store is the same size as Telstra Stadium and attracted 50,000 people during its opening weekend of December 3 and 4.
He says more than 1500 people queued overnight for the heavily discounted limited offers available each day, and IKEA paid for entertainers to keep the queue happy.
“We definitely see the store as a day out – it takes half a day just to walk around it so if it wasn’t a pleasant place to shop, we wouldn’t get many customers,” he says.
“We have rooms set up and appliances that work so if you want to be inspired by home furnishings you can come to IKEA and actually jump on a bed instead of reading a magazine.”
Similarly, Westfield have a vested interest in making their shopping centres entertaining places to visit and have pulled as many rabbits out of the hat as they can with the new Westfield Bondi Junction.
The centre is flooded with natural light, offers a concierge service, hands-free shopping, a unique mix of edgy street retailers like Zimmerman and Morrissey. It has been attracting 400,000 visitors a week, according to marketing manager Skye Fisher.
“All the market research we did said there was no way that people would shop at Bondi Junction, let alone at a Westfield,” says Westfield General Manager of Marketing Michelle Vanzella.
“But it’s a bit like McDonalds – no-one admits to eating it but they do it.”

WHERE TO NEXT?

Economist Chris Richardson says Australians’ decade-long love affair with retail spending is only now starting to show signs of stagnating.
“The average family spends more than it earns and that’s been music to the ears of retailers for a very long time,” he says.
“Savings rates are finally starting to rise and retail sales are not increasing.”
Demographer and KPMG partner Bernard Salt says the incessant discounting and sales in the market will wean out the weak retailers, leaving the strong to thrive and prosper.
“Discounting is like a disease that has spread by osmosis and it has broken the confines of the June and January sales,” he says.
”The weak will be cut from the herd just like Brashes, World of Kids and Waltons became carcasses that were left behind in the 1990s.”
Honeywill says there will be two faces of retailing: one face targeting the wealthy neo-consumers and the discount departments where “transaction rather than desire” drives sales.
“The quality retailers are exiting traditional shopping centres and going to the high streets and the hip strips like Oxford St,” he says.
Salt says the mass market is fragmenting into ever-smaller cells, which will drive a range of new retail options.
“You will see success in everything from the super regional shopping centres to the local markets where the herd can gather,” he says.
As for online retailing, both Salt and Honeywill say it suits certain categories such as banking and travel but will never replace the experience of real shopping.
“IT people have been predicting the demise of retailing for a decade, but they don’t understand the human need to shop – the internet can’t schmooze a customer the same way a sales assistant can,” Salt says.
Richardson predicts more retail price drops and discounting over the next six months.
“The best deals will be in household goods, electronics, plasma TVs, that sort of thing and with the dollar shooting up, I would expect more price falls in the new year,” he says.
“So don’t buy that plasma just yet …”

The New Retail Speak
Understanding the jargon is the key to understanding the future of shopping.

• Mass-tige – Prestige for the masses, or at least people who appreciate high quality goods.
• Pop-up retail – An American trend for shops that open and close in a short space of time, like the Commes Des Garcons outlet in New York that opened for six weeks. Weekly markets can also be considered pop-up retail.
• Dwell time – The time you spend hanging around a destination. Airport retailers love it when a plane is delayed and passengers extend their dwell time because they go shopping.
• Adjacencies – The value of being near other retailers, such as a shoe shop next door to a dress shop which is next door to a hat shop. Also called precincting.
• ELP – Acronym for Entertainment Lifestyle Precinct, invented by Westfield to describe food halls and other such places which increase “dwell time”.
• Consumption arousal – Creating a retail environment to arouse the human need to spend. Honeywill nominates the David Jones food hall at Bondi Junction as the best example in Sydney.
• Hip strips – Outdoor shopping strips that have their own unique character, like Oxford Street in Paddington, King Street in Newtown or Norton Street in Leichhardt.
• Big Box Retail – Also called bulky goods retail which includes stores like Harvey Norman, IKEA, Freedrom, Dick Smith Electronics and Toys R Us where you can’t just slip the purchase into your handbag and walk out of the store.
• Engineered buying – Sewing up deals behind-the-scenes with brands to offer strong price discounts in exchange for promotion in a catalogue or in-store display.
• Hands-free shopping – A term trademarked by Westfield to describe parcel pick-up for people who spend heaps, but can’t carry the bags.
• Neo-consumer – The prized customer who has the most disposable income to dispose of and will pay any price for something they desire.

WESTFIELD BONDI JUNCTION

There are no nasty glitzy Chrissie decorations in Westfield Bondi Junction, sweetie.
It’s Maningrida Aboriginal community fish traps artfully suspended in the atrium and decorations made from fluoro light tubes and car duco.
The David Jones food hall has Wagyu beef on special for $99.99 a kilogram, down from the usual $150, but the queues at the bakery are being held up while a woman buys $20 worth of bread on her David Jones credit card.
“Bondi Junction is like another world,” says Westfield General Manager of Marketing Michelle Vanzella.
Hip strip shops like Norton St Grocer and edgy boutiques like Zimmerman and Karen Millen have been lured to Westfield Bondi Junction (WBJ) to create an “urban premium” retail mix to satisfy the picky but high-earning customers living in the catchment area.
There are services like concierge, personal life-stylists and valet parking available and it is the flagship Westfield shopping centre, attracting 400,000 visitors a week.
But a shopping centre is still a shopping centre.
“The centre is no more interesting than any other, but it’s a very good example of aggregating quality retailers and creating what we call adjacencies,” says Ross Honeywill, director of the Centre for Customer Strategy.
Bernard Salt says Westfield has moved on from its contrived “plastic-ness” of the 1990s and done a “stunning job” with Bondi Junction.
”Those places used to be austere and stark and you were there for a purpose – to shop and go home,” he says.
“Now you can see Westfield wants to make people comfortable, they want more dwell time because naturally that will lead to people spending more money.”