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By Tony DeMasi, editor
he good old days aren’t here anymore, so do something about it.
One idea is to attract more customers. Think young! Market
research shows that young people are the customers with the most
disposable income… they also have influence over their parents’ and
grandparents’ money. Remember, they are the children and grandchildren of
the best shoppers of all: Baby Boomers!
A study from RainMaker Thinking shows that Baby Boomers (people born
from 1946 to 1964) make up 42 percent of the workforce and, while they enjoy
shopping, have generally speaking more money than time. The riches are then
trickled down to their children and grandchildren. But that doesn’t mean you
should ignore the Boomers. The wealthiest generation ever, Boomers continue
to spend, and enjoy life. As a group, the Baby Boomers already have lots of
money to indulge the spending whims of their children and grandchildren,
Generation Xer and Yers, which will continue to further enhance retailing
opportunities.
Some Boomers are retiring quite wealthy, others are going to work beyond
the normal retirement ages because they enjoy doing so and like the income
that goes beyond their needs. Either way, it’s a win-win situation for the aggressive
retailer. Boomers will shop on-line more and more, since it's harder to get
around when you're older, and it’s easier to get the stuff delivered. Children’s
book sales have grown nicely, since grandparents (not parents) are the heavy
buyers. Remember to use larger faced type in ads and catalogs. Boomers prefer
it. Boomers also like pampering their pets. Boomers tend to replace their kids
with pets. Boomer households without children also spend the most on houses,
cars, cruises, vacations, clothes and accessories, safety, eating out and items
considered the “finer things in life.”
As more money comes flowing into the marketplace, the retailers who can
capitalize on new trends and new niches will earn new profits. What more can
retailers ask than a marketplace where more buckets of discretionary money are
being thrown in?
Chances are some members of your workforce are Boomers. As such,
Boomers are also a great source of future employees. Many will work after
retirement from a full time career just for the insurance benefits - not necessarily
the income. Baby boomers will continue to be active in the workforce. A
recent AARP study found that 4 out of 5 boomers expect to keep working past
“normal” retirement age.
According to an IBM study, consumers in general prefer retail stores where
they are recognized as individuals, products are easy to find and the employees
are knowledgeable. Technology enhancements requested by surveyed shoppers
are:
• Technology-guided shopping (71 percent.)
• Scanners that identify produce and generate price tags (64 percent.)
• Intelligent shopping carts (59 percent.)
The top reasons cited by those surveyed for taking their business elsewhere are:
• Lack of distinction in services and products (over 50 percent.)
• Retailers that look and feel the same (46 percent.)
• Disorganized stores (31 percent.)
Watch out for bargain hunters! There’s no shortage
of people who love shopping for bargains even
though they can well afford higher prices. For them
shopping has become a recreational activity. They
caused the outstanding growth of dollar stores. Their
numbers (both shoppers and stores) will continue to
escalate at a rapid pace. Next to supercenters, dollar
stores are the fastest-growing segment among U.S.
food, drug and mass retailers. There are now more
than 15,000 such stores in the nation, according to
New York-based market-research firm ACNielsen,
and the top five chains have collectively added more
than 4,445 stores during the past five years alone.
An additional 8,000 stores are expected industrywide
by 2009, according to Columbus, Ohio-based
researcher Retail Forward Inc., yet market saturation
isn’t expected for at least another decade. Also, while
the core market of such stores always has been lowerincome
shoppers, the appeal is now extending to
older consumers, ethnic groups and those from moderate-
to upper-income households. ACNielsen
reports that 7 percent of Americans with household
incomes of more than $100,000 now shop at such
stores monthly, and those earning more than
$70,000 annually are the fastest-growing customer
category.
I hope you’re selling gift cards. If not, then you’re
missing a double gold mine. An estimated $55 billion
worth of gift cards were sold in 2004, according to
John Gould, director of bank cards at TowerGroup, a
financial services consulting group outside of Boston.
About 10 percent of the value of gift cards sold in the
United States goes unused, as consumers “put them in
their back pockets and forget about them,” Gould
said.
Retailers are also making “double income” from
gift card “breakage.” Breakage is the balance remaining
on gift cards that a retailer can claim when the
cards expire, are lost or are unused for a lengthy period.
Last year Home Depot reported $43 million recognized
as gift card breakage “was based upon historical
redemption patterns and represents the remaining
balance of gift cards for which the company believes
the likelihood of redemption by the customer is
remote,” the company said in the filing.
Gift cards were the No. 1 gift this past holiday season,
usurping apparel, said Thomas Miezejeski, vice
president of The Pelorus Group, a New Jersey-based
research firm. Gift cards are win-win matters for your
accounting, too. Miezejeski said, “It doesn't show up
as a transaction until it gets used,” he said. “So they
have to record it as a liability. At some time in the
future you will present that card.”
Miezejeski believes the gift card industry is underreported.
Miezejeski estimates $94.8 billion worth of gift
cards were issued last year. He estimates $109 billion
worth will be sold this year and $120 billion worth
next year.
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