Retailers struggle to cope with an accelerating decline in consumer spending. Major retailers, across all spectrums, are experiencing dramatic declines in same store sales:

Williams Sonoma - 38% (forecast)
Gap - 14%
Target - 6%
Macy’s - 7%
Home Depot -9%

Some of the strategies being seen in the marketplace include:

Cut costs - not prices.
Home Depot is resisting the market’s move to deep discounts. Their belief is that in today’s economy, these promotions generate little incremental traffic. Companies would rather maintain margins and move aggressively to cut costs. This includes closing stores, layoffs, slowing the opening of new stores, reducing inventory, etc. For example, Macy’s has consolidated its divisions, closed 11 stores and reduced its workforce by 7,000.

Localization
Macy’s is rolling out a My Macy’s strategy. Individual stores will have more freedom to select merchandise that better reflects the needs and tastes of their local market. Home Depot has similarly added a new emphasis on localization to take advantage of local tastes to wring every possible sale out of the market.

Focus on staples
Discount stores like Costco and Target are beefing up on heavily discounted staples like milk, eggs, baby products and bread. Hoping that these discounted necessities will draw more shoppers into the store.

Private labels
From Wal-Mart to Nordstroms, sales of private labels are growing and the share is coming out of the name brand companies. Retailers are pushing manufacturers to come through with substantial price deductions. And, if they don’t get the price cuts, the stores make room for more private label products on their shelves.

Is there a solution?
It’s clear that there is no single strategy that will save a retailer in these very difficult times. Instead, companies are forced to completely re-evaluate their business processes as well as their structural approach to the marketplace.

The most important goal is to survive the downturn in a way that does not damage the company once consumer spending returns. But, it’s a razor’s edge. How can you be the right retailer for a recession and a destination store when shoppers return?

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Martin Hoffmitz
VP, Client Partnering
BehaviorWorx Inc.
#202 - 222 Islington Avenue
Toronto, ON M8V 3W7

Email: martin.hoffmitz@bwxi.com

Office: 416.251.0111 x250

Cell: 647.287.4491
Fax: 416.251.9489
Web: www.bwxi.com
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Jack Mackey, talks about the game battle ship, and how it might relate to a better retail strategy:

If you could somehow see through, around, or over the shield, and your opponent could not, you would have a real competitive advantage. Otherwise, it's just a game of chance. My point? In the real world, in this stingy economy, the odds of keeping your customers cannot simply be left to chance.

You need to know more

Without information about your customers, you are just guessing about what to do. You need to see through, around, or over the shield between you and your customers. With reliable information about customers, you can act smarter to win their loyalty. You have to "win" customer loyalty because you have a lot of competitors trying to do the same thing. If your competitors know more about customers than you do, your odds of winning, or even surviving, just got worse.

To lead the field, you need a deliberate customer retention strategy, one supported by actionable customer intelligence.

Strategy comes from the Greek word strategos--which, roughly translated, is the art of the general, which is the art of positioning forces on the field of battle. An effective strategy requires an understanding of the market (field of battle).

Gathering intelligence refers to collecting data about customers and past customer experiences. In his book, On Intelligence, Jeff Hawkins (founder of Palm Computing) says, "Intelligence is measured by the capacity to remember and predict patterns in the world." So beyond remembering what happened in the past, intelligence answers questions like: Where are the opportunities to improve customer retention and increase customer likelihood to recommend next month?

Strengthening customer strategy

Almost all of the largest firms survey their customers to learn which elements of the customer experience drive customer loyalty.

But there is a much higher level of value. Winning companies start with customer satisfaction, but they are now moving to a much deeper and more profitable level.

They are asking: What delivers more profits?

They are finding the answer in Customer and Market Intelligence

An effective customer intelligence system provides you with:

· Knowledge and tools to increase customer counts;

· Knowledge and tools to increase Visit frequency and selection over competitors

· Knowledge and tools to increase purchase per visit

· Knowledge and tools to increase referral of business to the customer's social network

What drives the actions that drive your revenue, and how to most effectively act on that insight

This is actionable customer intelligence that is specific to each of your locations.

If you can walk in the mind of customers and your potential customers, you will know what to do that will have the highest impact on sales.

In a time of diminishing resources, you need better intelligence, in order to take intelligent action.

These days, intelligent action means - Give me more profits, while spending less!

How did we help a national chain spot a 45 million dollar revenue opportunity that was right under their noses?

How did we help a national women's retailer increase change room sales by 28%

The answers were contained in customer and market intelligence


_________________________________

Martin Hoffmitz
VP, Client Partnering
BehaviorWorx Inc.
#202 - 222 Islington Avenue
Toronto, ON M8V 3W7

Email: martin.hoffmitz@bwxi.com

Office: 416.251.0111 x250

Cell: 647.287.4491
Fax: 416.251.9489
Web: www.bwxi.com
_________________________________