Every eight years or so I dust off a photo from a nearly 30-year-old annual report of the Dayton Hudson Corp., predecessor of Target Corp. The photo, shown below my picture this month, is of an amber neon sign inside one of the company’s department stores. The simple, one word sign reads: Value.
Every time the country falls into a recession, retailers remind themselves that value, like cream, rises to the top of the shopper’s list of attributes when they choose which stores to patronize. Not that merchants ignore value during flush times. But when wallets are fat and ready for easy pickin’, too many retailers gloss over some essential basics.
I’m reminded of this truism by my personal shopping experience this past weekend. I needed some basic merchandise. Two OTC products, some diet soda, sugar-free candy, some aluminum foil. Wal-Mart or Target were my options. They are positioned across the street from each other in downtown White Plains, N.Y. Access would be from a paid parking garage adjacent to either store. I chose Wal-Mart. Why? Because Wal-Mart comped my parking. Target would not.
Now, $2 for parking is not going to send me to the poorhouse. But just as e-retailers have found that free shipping is more of a sales builder than almost any other promotion they can run, the prospect of saving $2 for parking can weigh heavily on a shopper’s psyche. Little things count and add up.
I used to be the retail industry’s best friend. Not because I work for a retail industry publication. Rather, because I spent where and when on what I wanted.
No more. Now my purchases are measured against reality. Weekends no longer are for expeditions to the mall. I know I should be spending. It’s everyone’s patriotic duty to spend our way out of this recession. But I just can’t bring myself to buy more. Even when I promise to clear my closet of an equal number of items for every new one purchased and donate the used clothing to the needy, I can’t bring myself to unsheathe my plastic.
I am not alone. The Commerce Department reported in early February that for six straight months personal spending deteriorated, while over the last three months of 2008 the personal savings rate climbed to its highest level in six years.
“Value trumps price,” a headline from page 11 of this issue reports. A survey by Brand Keys found that during a recession, consumers place more emphasis on value when expressing brand loyalty. In the value equation, price, it seems, matters less during times of deep discounting.
Retailers need to think like customers and also be creative. Value can be found outside of the attributes of the products people buy. It can be in a validated parking sticker. Or from a store associate who packs the weekly groceries in a customer’s car. Or in shuttle service to and from outlying portions of a big-box or mall parking lot.
Korean car maker Hyundai’s buyer assurance program offers to buy back an automobile if the purchaser loses their income. The always promotional JoS. A. Bank Clothiers has adapted this idea with a “Risk Free Suit program.” If a customer buys a suit from March 16 through April 9 and involuntarily loses his job between April 16 and July 1, JoS. A. Bank will rebate the cost of the suit, up to $199. And the customer may keep the suit so he can “be dressed appropriately as he meets with his next employer,” said R. Neal Black, CEO of JoS. A. Bank. Is the program gimmicky? A public relations stunt? Perhaps. But it also reflects an awareness that consumers are reluctant to spend, and that anything that provides assurance adds value.