Shopper Insights & Retail Solutions

December 2008

In This Issue

* Retail's Silver Lining...Coming Soon

* Around the World of Retailing with Chris Ohlinger: Mumbai, India

* SmIleRS...thoughts to make you smile from SIRS

* inSpIRationS...thoughts to inspire you from SIRS

Retail's Silver Lining . . . Coming Soon:

In the Pot at the End of the Rainbow Back to Top

TODAY'S bleak news is caused by an entire shopper "strata" shifting their reduced shopping dollars to strong value merchants (in blue) in an over-stored marketplace - leaving the weaker positioned merchants (in green) to struggle mightily. Some fatally. But this effect should improve the long term health of many retailers.

RESULT: A changing of the guard is coming in many categories & trade channels.

Long term Shopper Shifting has occurred...and this strata of new shoppers have not only shifted their shopping patterns, but they are very happy with their new alternatives.

THE GOOD NEWS: SIRS' Shopper Model & Oracles are predicting significantly healthier retail sales within the next 8 to 10 months - probably by August. Some merchants will even report close to double digit identical store sales increases.

THE BAD NEWS: The emerging healthier retailers will benefit from a large number of "Mediocre to Poorly Positioned" Retailers (according to their Potential Shoppers) but several will effectively either be gone or will be unrecognizable from who they are today.

Reason: The Kamikaze Theory of Retail Expansion - where it is an excellent idea for any individual merchant to over-store a market but suicide when all merchants do it - especially in a down economy.

Ironically, in a very short period of time, today's "great retailers" will become "average" while new and better ones will emerge (assuming that the US Government does not offer bailouts to the most badly suffering retail giants). Home Electronics is an example of where this type of restructuring phenomenon will occur and the opportunity areas it will create for Tomorrow's New concepts.

Around the World of Retailing:

Mumbai, India

with Chris Ohlinger, CEO Back to Top

THE ATRIA Mumbai, India ... A View of the Future? Let's Be Thankful.

I'm a pretty apolitical guy. I'm a lot like most of you. But I am going to share with you a pretty bleak picture of a scenario that's already a reality in India - an established democracy battling terrorism inside their own country. I believe it is the most important Retailing experience I had in this around the world adventure.

The Atria in Mumbai is a new shopping center featuring five floors of beautifully coordinated and easy to shop stores with some of the most wonderful and unique shops in all of India.

It's as nice as almost any of the centers in the U.S. or around the world for that matter. And many of the stores are wonderful studies in merchandising, especially in a small space. The Heritage store was my favorite. But these observations are of very secondary importance.

What stood out was the impact that terrorism can have on everyday activities that we take for granted here - like shopping.

I was greeted at the mall entrance by several security guards as I got out of the taxi to enter the indoor mall. They checked me closely to judge whether I was an obvious terrorist. The next group of security guards who attended to the x-ray machine searched me - as they did every person who entered the mall through this single entrance.

I began my actual shopping trip taking a first floor photo of the exquisite entrance complete with an incredible sound system and a jumbo-tron type video screen showing fabulous and entertaining products and slices of Indian life. Another guard ran up to me. I suspected that she was not going to ask me if she could take my photo like a number of kind Indians are so willing to do. She kindly but sternly told me that there was no photography allowed INSIDE the mall. I was later to find out that there was no photography OUTSIDE of the mall either.

I asked her why. She explained "Security from terrorists. There are a lot in our country, a lot who have access to our country." Her comment had already been punctuated by the front page headlines that very day - where 55 policemen had been killed in a terrorist riot - and our experience the previous day - where shots were fired over our head by terrorists on our drive from Agra to Jaipur.

I graduated from West Point. So I found myself evaluating the mall based on "fields of fire" "enfilade fire and sniper positions" from the many guards who were stationed on every floor overlooking the open foyer and each floor below them. I hope these aren't merchandising terms of the future, but I couldn't help but think how well the center was designed and guards were deployed to maximize the impact of these combat tactics.

I proceeded to the escalators - which also had security guards posted at each floor. Eventually I had to go to the bathroom where, you guessed it, there were guards stationed outside each door. What you probably did not guess was that there was a guard posted inside as well.

I hope it does not sound like I am criticizing India, its people or its retailers for the steps they are taking to keep their shoppers safe. I worry that we could someday find ourselves in this same position and I would like to put U.S. retailers on alert to the fact that the Future of Retailing and our everyday activities could be dramatically effected if terrorism is allowed to come to our shores. What's going on in India would significantly disrupt our way of work and life. I am not smart enough to calculate the economic or emotional impact on the dramatic change to our way of life, but it would be huge - and devastating to our stores. Today, it feels like a Christmas season with little reason for joy among a large number of retailers and consumers. I thought this report would be timely and hopefully generate a feeling that perhaps this Christmas might not be so bad - and that we should be thankful that the successful effort made by our servicemen and women and the freedoms they provide to insure against a catastrophic change in our way of life and the liberties and unparalleled standard of living that we enjoy.

It's going to be a good Christmas. We're not India.

Smilers...thoughts to make you smile from SIRS Back to Top

I'm not saying that the customer service in my bank is bad, but when I went in the other day and asked the clerk to check my balance ... she leaned over and pushed me.

Inspirations...thoughts to inspire you from SIRS Back to Top

"In the factory we make cosmetics, in the store we sell hope." -- Charles Revson

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For more information on these articles, please email sjobedye@sirsinc.com

Strong Value merchants' sales INCREASED 3% in November. Other merchants' sales DECREASED by more than 12%.
This is the largest difference we have seen since we began measuring these types of changes 20 years ago.

The stock market value (Market Cap) of several of these merchants (in green) is LESS than the value of their inventory at cost.

Over 7,000 major retail stores have or will be closing shortly.
How will you handle all the business after the trainwreck? SIRS Retail Marketing Knowledge System can help.

Many retailers have asked us "what is the most important reason why shoppers choose to shop where they do?"

We don't exactly know. But we do know what the single most important reason why shoppers will choose to NOT shop somewhere: Fear for their Safety. Usually, it's a "non issue" but we have seen it absolutely cripple retail stores in the downtowns of several major cities. No appeal we know of can overcome this Fear - even when this fear is "perceived" and not "real."