The Retail Threat is Real
Consumers Need a Compelling Reason to Buy By Mail
By Alicia Orr Suman
Newsflash: Wal-Mart, the world's largest retailer, posted second quarter sales gains of 26 percent. Target, another leading discounter, had a 16.2-percent revenue increase for the same period.
The discounters are killing many traditional mall retailers—and also may be cutting into direct merchants' coffers. Are direct marketers missing the boat on some important consumer trends?
What consumers want now. As I recently shopped for fall clothes for my daughter, not one of the catalogs I browsed gave me a compelling reason to buy from them. All had nice clothes and OK prices, but nothing jumped out at me. And for the price, I knew I could do better "out there."
So we hit the local retail stores. Between Target, Marshall's and Old Navy, we got everything we needed in one trip—all for incredibly low prices.
An article I recently read in The Wall Street Journal spoke of how many of the big discounters are enjoying double-digit sales growth, while mall retailers are hungry for any store traffic at all. The Miami Herald reported in August that one survey of parents showed 51 percent had planned to shop for back-to-school items at Wal-Mart. If my recent experience was any indiction, this doesn't bode well for apparel catalogers.
Charlie Silver, vice president of marketing for Bloomingdale's by Mail, recently told me that even high-end catalogs like his are having to react to the discounters' success.
Bloomies is not alone in facing this threat. Go into Target and you'll see replicas of Pottery Barn styles throughout the home decor department—me-too merchandising at low, low prices.
Sales and marketing textbooks expound on the importance of having a unique selling proposition (U.S.P.). The Targets of the world seem to have hit the nail on the head when it comes to giving consumers what they want: the right products, at the right prices, and usually a stone's throw from home.