Friday, September 3, 2010

The secret to growth in a recession

It seems that amongst foreclosures, unemployment and inflation, retail therapy hasn't lost its prominence. Sales figures are slightly up, and as far as the apparel industry is concerned, women are the pot of gold to keep numbers strong in a weak economy.

There are many different theories that claim to explain this phenomenon. Some attribute it to psychological consumer behaviour; that amongst the negative economic forecast they spend to feel better. Others claim it's simply due to the intense job market; the old idiom of "dress for success" may apply. It could also be attributable to the heavy discounting prevailing in retail. Irregardless of why women are spending; marketers are definitely starting to take notice.

The oldest misconception in marketing is that women can be marketed to the same way as men. Modern day media is smart enough to avoid this mistake.

Holt Renfrew; arguably Canada's largest high fashion retailer recently posted double digit increases in sales mostly attributable to womens' lines and footwear. Part of this trend is due to some or all of the factors above, but there's a new and emerging trend adding to the rise in women's sales; segmentation in old markets.

This is an important consideration for highly competitive industries. For example, Victoria Secret truly broke the mold of the distribution channels for lingerie and/or "sexy" undergarments. Before Victoria Secret's radical shift there weren't specific lingerie stores of its kind or scale, and lingerie as a line extension was a pipe dream for retailers such as Abercrombie or American Eagle. Victoria Secret's gone even a step further with their "pink" label; tailoring it to pre-teens and younger.

Another example of this trend is seen in a recent extension by Under Armour to attain a piece of the women's active-wear market. A historically testosterone-filled company, they got burned early on in the women's segment by utilizing the comically dubbed strategy of: "pink it and shrink it". Now ready for round 2, Mr. Plank their founder claims that eventually women will outpace men in sales for the company. Although the new set of ads to coincide with the launch only features women, Mr. Battista (VP of Brands) argues that women they target are not looking to be treated differently than men. This is an interesting division and a new segment perhaps otherwise overlooked by apparel companies that seem to favor the opposite at the moment.

Building on this trend is how a new segment can be reached not just from designing a new line of products, but by strategic licensing. Febreze recently became the "Official Air Freshener of the NFL" to many astounded parties. This poses a lot of questions, until it is explained that it isn't targeting men, but rather a growing group of women that are tuning in to the N.F.L. This has also led to changes in opening acts (think Taylor Swift and Olivia Manning) to promote the concept of "Being Game Day Ready". It's an incredible balancing act for Procter & Gamble; too feminine or too masculine in the message and the narrow segment will be missed. The sales numbers will be the true judge of success, although this ad seems to be akin to the last bowl of porridge; just right:

As marketers it is easy to throw our hands up in the air and flail them around while whining on how the recession has cut spending. While some decreases are expected, it's not as disastrous as some media may want to make us believe. I can guarantee you that many year-end marketing presentations will include a bullet point such as:

> Recession hindered otherwise positive levels of growth


> Current economic environment led to decreased consumer spending on goods

This isn't good enough. Top brands and CPG companies are proving that there's still success to be had (potentially that is; numbers are a different story) by keeping a close eye on consumers to re-segment the marketplace. Hundreds of books will (and have) been written on the topic of the "post recessionary" consumer. It may however be too late for marketers by the time their ink dries.