Retailers on Quest to Rekindle the Personal Touch of a Bygone Era

In days of yore, retailers knew their customers. Sales clerks sent invitations to store events, called when items of interest arrived and had Rolodexes crammed with notes about shoppers' favorite brands and styles. That style of shopping -- an intimate experience, not an anonymous one -- has long been thought dead, driven to extinction by the invasion of the big-box retailer. But now retailers are hoping to recapture some of the old magic.

They're doing so by updating and expanding loyalty programs, which once rewarded shoppers only for frequent purchasing, and by offering locally relevant marketing and merchandising. "We've got a highly educated consumer who is probably more demanding than she's been in the past," said Martine Reardon, VP-marketing at Macy's. "She wants to go to a retailer that understands her, is really relevant to the lifestyle she's living, and really does pay attention."

My Macy's, now in its third year, seeks to be more relevant to consumers by stocking shelves with items popular in local markets -- Elvis Christmas ornaments in Memphis, Tenn., and electric pizzelle presses used to make the Italian cookie in Parma, Ohio, for example.

The program also extends to marketing. Events celebrating the Kentucky Derby have been held in advance of the race at Louisville, Ky.-area stores. And big wins for local sports teams are recognized with ads in the hometown newspaper. This month, Macy's Star Beach Party program will launch in Chicago, targeting college students from 10 area campuses including Columbia College, Northwestern and Loyola. The program pairs texting and pop-up events to lure students shopping for spring break fashions and, eventually, interview suits, the retailer hopes. The program was conceived by a regional executive who saw an untapped audience of 65,000 college students, a Macy's spokeswoman said.

Meanwhile, Food Lion has launched My Food Lion, inspired, in part, by My Macy's, said Cathy Green, president of the Food Lion family of banners, during a recent National Retail Federation conference. The program allows customers to create a profile personalized with relevant specials and recipes.

Worth noting: My Macy's and My Food Lion are separate from those retailers' loyalty programs, Macy's Star Rewards and Food Lion's MVP Card. The former focuses on understanding the customer and delivering desirable products and information, Ms. Reardon said. The latter is meant to reward customers for frequent shopping.

Retailers are also getting savvier about how they use customer information. PetSmart uses its database of email addresses to send out targeted emails with editorial content, as well as coupons. A recent note to reptile owners who typically buy crickets extolled the virtues of worms, included a link to information on reptiles and provided a $2 coupon for any live worm purchase. "Crickets are an important part of a reptile's diet -- but did you know that worms are an even better source of energy?" the email said. "Come on in and ask a store associate to help you design a diet that's just right for your reptile."

Likewise, Sears Holdings has overhauled its loyalty program in the past two years, morphing it into Shop Your Way. The program, which rolled out nationwide in November 2009, now counts more than 50 million members. Shoppers earn 10 points for every $1 spent in store or online and get access to bonus offers and prizes, as well as perks, such as the ability to return items without receipts. The program is cost-effective and gives Kmart and Sears the opportunity to build a robust database of consumers.

"The spectacular growth of Sears' Shop Your Way program is testimony to the ongoing power of a very simple, classic idea: rewarding loyalty based on customer behavior," said Lawrence Kimmel, CEO of the Direct Marketing Association.

More robust databases and better targeted communications will go a long way toward helping retailers recapture the magic of retailing days past. But it's not easy or simple. In the fall, Macy's sent out a mailing with upward of 30,000 different versions. Using information gleaned from its database, the retailer varied the page count and the items promoted. The catalogs varied in size from 32 pages to 76 pages, featuring additional pages of shoes for footwear fanatics or children's clothing for moms.

"What we tried to do was really customize (catalogs) to what the customer is really looking for and her past behavior shows she might want," Ms. Reardon said. "I still have circles under my eyes from it. It was pretty resource intensive. But we learned a lot, and we are going to do similar things in the future."

(Source: Advertising Age, 02/14/11)

2011 auto sales per dealer may reach pre-recession levels, report says

DETROIT (Bloomberg) -- U.S. auto sales per dealership may return to levels reached before the recession after General Motors Co. and Chrysler Group LLC closed locations.

Sales per dealer may rise to about 745 new vehicles this year, according to auto-dealership consultant Urban Science. The National Automotive Dealership Association forecasts total U.S. sales in 2011 may rise 11 percent to 12.9 million, which would be about 23 percent below the annual average from 2000 to 2007.

The number of U.S. auto dealerships fell 4.4 percent last year to 17,659, Detroit-based Urban Science said today in its annual Automotive Franchise Activity Report. The rate of closings slowed from 8 percent in 2009, according to the report.

“The domestic consolidations worked and have allowed the remaining dealers an opportunity see their numbers rebound faster,” John Frith, vice president of Urban Science, said in a statement.

GM, the largest U.S. automaker, and Chrysler eliminated more than 2,200 dealers as part of their bankruptcy reorganizations in 2009. The shutting of about one-fourth of the companies’ dealerships drew criticism by the special inspector general for the Troubled Asset Relief Program, which said in a report last year that the “dramatic and accelerated” closings may not have been necessary and added to unemployment.

More closings expected

GM reorganized with $49.5 billion in government aid, while Chrysler received

$12.5 billion in assistance for its reorganization that year from the government’s TARP program, which also aided banks.

Of the 822 dealerships that closed last year, almost all were either GM and Chrysler stores in arbitration following the automakers’ bankruptcies, or retailers of Ford Motor Co.’s discontinued Mercury brand, Frith said.

About 53 percent of Mercury franchises closed by the end of last year, and Ford plans to shut the remaining 819 outlets, Frith said today.

Ford also plans to reduce the number of dealerships selling its Lincoln luxury brand in the biggest U.S. metropolitan markets by 25 percent to 325 outlets, the automaker said this month at the NADA convention in San Francisco.

Ford ended last year with 3,131 franchises selling its namesake brand, surpassing GM’s top-selling Chevrolet brand, which had 3,084, for the first time, Frith said.

New brand entries

While new entries by brands such as China’s BYD Co. and India’s Mahindra & Mahindra Ltd. are “certainly coming,” they’re unlikely this year, Frith said.

“I would be very surprised if they don’t have a presence here in the next 10 years,” he said. “Timing is a guess at this point. There’s a lot of hurdles for a brand to enter the U.S. with certification and setting up dealer networks.”

Automakers such as Shenzhen-based BYD or Mahindra, based in Mumbai, may enter the U.S. market by purchasing other brands, similar to the way China’s Zhejiang Geely Holding Co. bought the Volvo Cars unit from Ford last year, Frith said.

The U.S. auto industry averaged a 16.8 million annual selling rate from 2000 to 2007, according to Autodata Corp. The U.S. is the world’s second-largest auto market, trailing China in each of the past two years.

Determining What Customers Expect

Knowing your client's expectations gives you a tremendous advantage over your competition.

Most salespeople will not ask what those expectations are; consequently, they cannot perform the way the client wants them to. In addition, most will rely on their company to "exceed" the client's expectations. It is impossible for a company to exceed the client's expectations because the company simply has too many clients with too many different expectations to individualize the sales process.

Consequently, you are the only one capable of doing it. It is your job to turn the purchasing experience into the one your client wants, not your company's. You must become the client's advocate in the process.

Knowledge really is power. By taking the simple step to ask your client what their expectations are, you gain the power to give them the experience that will give you the basis for gaining referrals and word-of-mouth marketing. In addition, if you discover your client has unrealistic expectations, you can deal with them at the beginning of the sales process rather than finding out later, after they have evolved into a real problem.

Do yourself a huge favor -- ask. Not only will it improve your relationship with your client, you'll see the effort returned in the form of more sales.

Study: Women Show Strong Personal Renewal

Women may not be able to control the larger economic scenario, but they can improve how they feel about themselves and their lives.

That's the basic thinking behind a pronounced personal renewal or "me-covery" post-recessionary trend among American women, according to a new national survey conducted by specialist marketing firm Saatchi & Saatchi Wellness and Time Inc.'s Health brand.

The new emphasis on taking control and responsibility for personal well-being and happiness and reevaluating old choices represents a major shift in women's attitudinal and behavioral patterns within a markedly short time frame.

In 2009, a similar national survey of adult (18+) American women by Saatchi & Saatchi Wellness focusing on the economy's influence on wellness issues found that their primary wellness goals were "holding it together" and "surviving the day."

The attitude/behavior shifts have important implications for numerous product/service categories and brands, including food and beverages, restaurants and personal care and beauty, according to the research sponsors.

For one: Women are "re-investing in their health and wellness," points out Health publisher Dave Watt.

While 92% of the 800 women surveyed (representative of U.S. adult females as a whole) still feel negatively affected by the economy and 10% feel more affected than in 2009, 64% say that they are committed to making a positive change and taking better care of themselves by eating right, staying physically fit, "looking good to feel good" and having fun.

Given female consumers' more positive overall attitude and focus on self-empowerment, physical and emotional health and making "real changes" in their lives, "marketers should reexamine the ways that they are talking to and engaging with women," stresses Saatchi & Saatchi Wellness chief strategy officer Johanna Skilling.

The indicators point to longevity for this lifestyle shift among American women, adds Ned Russell, managing director for the marketing firm.

The major take-aways for marketers:

• "Taking responsibility" has made health and wellness women's #1 priority. This includes taking steps to prevent health problems and making a commitment to manageable health/fitness goals.
• "Reevaluating choices" reflects renewed confidence and includes increased emphasis on value-driven purchases. Value is defined as offering benefits worth the money, meaning that price alone is not the dominant purchasing factor.
• "Welcoming the right kind of support" means that women are seeking sources of inspiration and motivation, as well as meaningful rewards that mesh with their new lifestyle priorities.

Specific survey findings confirm upswings in purchases of health-related and beauty products, as well as shifts in the retail formats in which women are purchasing these products:

• 54% of adult female respondents report buying more healthy food overall, and 47% say that they're buying organic foods more often, despite these foods' higher prices.
• 74% of those most affected by the economy report that they are buying less fast food than in 2009 (up from 41% indicating fast-food cutbacks in the 2009 survey).
• 48% report being committed to working out more on their own and gaining inspiration and motivation through online music downloads, workout videos and interactive gaming systems. More than one-third (37%) report working out at the gym more often.
• 86% report engaging in more online health research (up 47 points from 2009) and 79% say that they're now seeing their doctors regularly (up 21 points).
• 64% are buying prescription medication (up 16 points from 2009) and 48% are buying more vitamins (up 27 points). Also, 16% are buying more over-the-counter remedies and 14% are using alternative/homeopathic remedies.
• About half are buying more hair care (47%), skin care (45%) and oral care products (51%), and nearly half say that "value for money" and "product quality" are the key brand characteristics influencing their purchases in these categories.
• 52% say they are "committed to having more fun," 35% report that they are currently considering a vacation, and 24% report using products to enhance their sex lives (up 17 points since 2009).
• 70% now say that they buy skin care/beauty products primarily in drug stores, grocery stores and mass retailers -- up 25 points from 2009. Just 6% report they are buying more luxury/high-end cosmetics than in past years.

(Source: Marketing Daily, 02/02/11)

Auto Sales Sizzle, Forecasts Rise

Busy Showrooms, 17 Percent Rise in January Transactions Spark Optimism

So many retail customers are pouring into dealer showrooms that several carmakers and analysts have boosted their 2011 sales forecasts.

TrueCar.com says January's retail SAAR was 10.2 million, up from 8.3 million a year earlier. And that retail burst lifted January's overall selling rate to its highest level since cash for clunkers 18 months ago: a seasonally adjusted 12.6 million units.

"Consumers are driving much of the gain," said Don Johnson, General Motors' U.S. sales boss.

Light-vehicle sales in January jumped 17 percent from a year earlier to 819,938 units.

Among the top seven automakers, according to industry sources, combined fleet sales declined by 12 percent and retail sales rose 28 percent.

"Retail sales were much stronger than fleet," said J.P. Morgan analyst Himanshu Patel in a note to investors. "Fleet sales were down, primarily driven by weaker daily-rental sales."

Light trucks outsold cars for the fourth straight month. And General Motors Co. and Toyota Motor Sales U.S.A. fired the first shots in what some analysts fear could become a new incentives war.

January's overall SAAR of 12.6 million was fractionally higher than December's and above the Bloomberg consensus forecast of 12.4 million. Last year U.S. sales were 11.6 million, up 11 percent over 2009.

The retail gains encouraged automakers and analysts.

"The recovery is being fueled by real, natural demand and by consumers who aren't just buying what they need but also starting to buy because they want to," said TrueCar analyst Jesse Toprak. "The most promising thing is the retail growth."

GM's Johnson credited retail for the automaker's 22 percent January sales increase.

GM and Ford last month each added half a million units to the upper range of their 2011 sales forecasts -- both to 13.3 million units. IHS Automotive boosted its forecast to 13.1 million from 12.8 million.

On Jan. 27, J.D. Power and Associates raised its forecast to 12.9 million from 12.8 million. So far, TrueCar's Toprak has not changed his 12.7 million forecast. But he's reviewing it and said: "There is more upside than downside this year."

Several automakers are sticking with 2011 projections made at the start of the year but say they are leaning toward the upper end of their ranges after January's results.

Except for Mazda's 9 percent decline, all automakers boosted sales in January. Hyundai-Kia Automotive, Chrysler Group and GM outperformed the market. Hyundai-Kia gained 24 percent, Chrysler rose 23 percent, and GM rode an incentive surge to its 22 percent sales increase.

Three groups increased volume but lost market share. Nissan North America's sales rose 15 percent, American Honda Motor Co. was up 13 percent, and Ford Motor Co. rose 9 percent.

Ford-brand sales were up 22 percent, but Ford said its lower overall figure reflected a planned 27 percent decline in sales to daily rental companies, as well as last year's elimination of Mercury and sale of Volvo.

George Pipas, Ford's chief sales analyst, said he expects retail sales to provide more growth than fleet this year, especially in the first half.

At Ford, fleet declined to 30 percent of total January sales, from 37 percent a year earlier. The daily rental mix was down to 12 percent of the total, from 18 percent last January. Pipas expects sales to commercial fleets to increase this year for Ford.

Toyota Motor Sales' 17 percent gain matched the industry's growth. But for Toyota, which has emphasized its retail strength for a year, January's growth was driven by fleet sales. A 7,000-unit Corolla fleet delivery made the small sedan the best-selling car in the country in January, Toyota said, and increased the fleet mix for the Toyota brand.

"Our January fleet was 12.6 percent of the mix, compared to 8.5 percent for (all of) 2010," said Toyota brand General Manager Bob Carter. But he insisted Toyota intends to limit fleet to 2010 levels over the year ahead.

Sales of full-sized pickups sizzled in January -- up 29 percent to 94,320. Every model posted gains of at least 22 percent except the Nissan Titan, which was down 4 percent to 1,431.

Sales of pickups, vans, SUVs and crossovers rose 29 percent to 413,276, and cars gained 7 percent to 406,662. A year ago, cars led light trucks by almost 60,000 units.

Subaru of America, the only brand to increase U.S. volume three straight years starting in 2008, started the New Year with a 21 percent sales gain.

(Source: Automotive News, 02/07/11)

U.S. auto sales may reach second-fastest rate in 17 months

U.S. automobile sales in January may have reached the second-fastest pace in 17 months, aided by rising business spending and consumer confidence.

January vehicle deliveries, to be released tomorrow, may have run at a 12.4 million annual rate, the average of six analysts’ estimates compiled by Bloomberg. The seasonally adjusted rate in December was 12.6 million, the fastest since the government’s “cash for clunkers” program in August 2009.

Spending on equipment and software rose at a 5.8 percent annual rate in the fourth quarter, showing businesses were investing in a recovering economy. Humphrey & Associates Inc., a family-owned electrical contractor in the Dallas area, added seven Chevrolet trucks and vans to its fleet in December after delaying the purchases during the recession.

“People are beginning to spend a little money they’ve had on the sidelines,” Randy Humphrey, 42, the company’s vice president, said in a telephone interview. “We are dependent on our commercial and industrial clients and their business growth to make ours. When they’re adding, we’re adding.”

U.S. consumer confidence rose more than forecast in January to the highest in eight months, the Conference Board reported last week, while the Thomson Reuters/University of Michigan final index of consumer sentiment fell less than analysts estimated. Gross domestic product grew at a 3.2 percent annual pace in the fourth quarter, the Commerce Department reported.

Analysts at Deutsche Bank AG and J.D. Power & Associates this month raised their estimates for 2011 light-vehicle sales after auto demand topped expectations in the fourth quarter. Gains from General Motors Co. and Ford Motor Co. may push the industry to a second annual sales increase after a 27-year low in 2009.

‘Strong close’

“There was such a strong close in December, and we aren’t expecting an equally strong payback,” said Jeff Schuster, the director of forecasting at J.D. Power who raised his full-year sales estimate to 13 million from 12.8 million. “That sets the year up for a good start.”

Full-year sales in 2010 were 11.6 million, or 31 percent less than the average 16.8 million annual rate before the recession, according to researcher Autodata Corp., based in Woodcliff Lake, N.J.

Ford, which last week announced full-year profit of $6.56 billion that was the most since 1999, may say sales climbed 18 percent, according to four analysts’ estimates.

“Ford still relies heavily on F-150 sales for the profit generation, and that segment is poised to outperform the market this year,” said Jesse Toprak, vice president of industry trends at TrueCar.com, who predicts a 16 percent gain for Ford in January.

Chevrolet pickups

GM may report a 9.2 percent increase in January sales, the average of four estimates. The automaker announced this month it would add a third shift and about 750 jobs to its assembly plant in Flint, Mich., to meet rising demand for heavy-duty pickups.

The largest U.S. automaker said its top-selling Chevrolet brand’s sales to small businesses accelerated in the fourth quarter, including a 54 percent surge in December from a year earlier.

Federal Reserve policy makers last week kept measures to stimulate the economy in place after President Barack Obama reached an agreement with Republicans in December to extend by two years tax cuts enacted during President George W. Bush’s administration.

“Interest rates are low enough, credit availability is improving, and we didn’t get a jolt from tax increases that would have affected higher-income taxpayers who buy a lot of vehicles,” said Paul Ballew, chief economist for Nationwide Mutual Insurance Co. in Columbus, Ohio. “All those things are clear pluses helping to bolster demand.”

Toyota sales

Toyota Motor Corp., the only large automaker to post a U.S. sales decline last year, may report a 16 percent gain for January, the average estimate of four analysts.

The world’s largest automaker suspended U.S. sales and production of eight models a year ago that accounted for more than half its deliveries. The company has recalled more than 18 million vehicles globally for a variety of reasons, including unintended acceleration, since the fall of 2009.

Barclays Capital analyst Brian Johnson predicts a 2.8 percent decline for Toyota, its fourth straight month of a decrease in sales from the earlier year. Deliveries of the top-selling Camry and Corolla cars may decline at least 10 percent, and Lexus sales also may drop, Christopher Ceraso, an analyst at Credit Suisse in New York, wrote in a Jan. 27 research note.

Chrysler estimates

Chrysler Group LLC may have increased sales 27 percent, the average of four analysts’ estimates. The automaker is preparing for an initial public offering this year and has said it can break even on an operating basis with 150,000 fewer vehicle sales annually.

The company is selling about 20 percent of its cars to fleet buyers such as governments and rental-car companies, down from about 50 percent in some months last year, Caldwell said.

Chrysler is considering two new pickups, a seven-passenger Jeep and a smaller minivan as part of a plan to boost global sales to 2.8 million in 2014. Worldwide deliveries gained 21 percent to 1.6 million last year, the automaker said.

Deliveries at Honda Motor Co. may have risen 24 percent, and Nissan Motor Co.’s sales may have increased 14 percent, according to the average of four analysts’ estimates.

Confidence Must Be Restored to Improve Job Market

Although the unemployment rate fell to 9.4 percent in December from 9.8 percent in November, some 14.5 million people are still classified as unemployed by the Bureau of Labor Statistics.  Even if the recovery continues along its current track, some six more years will be needed to bring the job total back to where it was November 2007, when some 146.6 million people were employed in the United States, says Robert Higgs, senior fellow in political economy with the Independent Institute.

• Employment began to fall after reaching its peak in November 2007, reaching its low point in December 2009, when only 138 million people had jobs.
• In the year since, employment has risen by only 1.25 million, or less than 1 percent.

Meanwhile, millions of people have withdrawn from the labor market during the past three years.

• Of the people not in the labor force, an estimated 4.7 million would seek work if they believed they might find a job.
• If these individuals were considered unemployed, along with those actively seeking work, the official unemployment rate would be more than 12 percent today.

Data on the division of employment between government and the private sector tell an even sadder story, says Higgs.

• Between November 2007 and December 2009, some 8.5 million private-sector jobs disappeared in nonagricultural industries.
• By December 2010, only 1.8 million of those lost jobs had been regained, leaving a net loss of 6.7 million jobs.
• In stark contrast, government employment during the same period hardly changed.

With private-sector jobs greatly diminished and government jobs relatively steady, at least for the time being, the ratio of private-sector workers to bureaucrats has moved in an unfavorable direction.  The government's biggest challenge today is to restore lost confidence, says Higgs.

Source: Robert Higgs, "Uncertainty Continues to Depress Jobs," Investor's Business Daily, January 25, 2011.