In this election, as in 1992, voters are telling anyone who'll listen that "it's the economy, stupid." The stock market is down, affecting 401Ks and IRAs. And Reuters reported on October 17 that the University of Michigan Index of Consumer Sentiment showed "consumer confidence in early October registered its largest monthly decline in the history of the survey." With consumer spending off, retailers are bracing for the worst holiday shopping season since the NRF began surveying consumers about their planned holiday spending in 2002.
To understand the impact of the current state of the economy on consumer shopping behavior, Acxiom and BIGResearch teamed up in September to take a fresh approach to customer segmentation. Based on integrating survey data information, they reported this month finding four elements that stood out as key shopping behavior drivers:
- Past purchase behavior and future intent
- Importance of price
- Shopping trip preference
- Type of store shopped most often
Using this approach, they found that one-third of consumers are resisting being affected or are unaffected by the state of the economy. They appear more disposed than other segments to respond positively to improvements in their financial situation. These Potential Rebounders are most likely to loosen up on spending as the economy improves, and consist of three distinct segments: Savvy Spenders, It's My Life and Protecting the Dream.
In addition to "potential rebounders," BIGResearch found the market consists of two other groups of consumers: Status Quo and Digging In. As their names suggest, Status Quo segments have not changed their behavior in response to the economy. Within this grouping there is one high-value segment that is continuing to spend unabated despite the economy. Full Spend Ahead resembles the three potential rebounder segments and positioning for them should appeal to this segment, as well.
This is good news for retailers who are paying attention, and for their customers. It suggests that retailers can position themselves to attract and retain these high-potential customers regardless of store format. And these four segments represent nearly 50 percent of the market.
Zappos is one retailer that is not waiting for a turnaround to address the themes that resonate with these most attractive customer segments. The company's "Powered by Service" positioning speaks directly to customers who want an efficient shopping experience, and the retailer offers lots of brands to choose from. The company uses a similar service message — "making customer service fashionable" — in its recent extension into apparel. Zappos conveys a value message by emphasizing free shipping both ways, and free 365 day returns.
Look for other, alert retailers to follow Zappos lead and stake their claim to the Potential Rebounders and Full Spend Ahead segments that will lead the way out of the retail downturn.
Judy Hopelain is a consultant with Brand Amplitude and a blogger on the topic of retail experiences.
