Fitch Ratings is calling for the weakest holiday season in the past twenty years for retailers. This is not surprising given the current state of the economy. The firm notes that retail sales have turned negative in the “back to school” period for the first time since 2001, and are expected to remain negative for the balance of 2008. How do you emphasize value in your marketing campaigns? In a release, Fitch writes:
For 2009, Fitch expects that these trends will continue as consumers curtail discretionary spending and look to maximize value. Comparable store sales growth for operators selling clothing, home related goods, and other discretionary categories is expected to continue to be negative while those companies that have built a strong value perception and have strong private and exclusive brand offerings will outperform their peers. While the weak sales will be geographically broad based, sales pressure will be more acute in those markets most impacted by housing and job related weakness. Similar to the 2008 holiday season, promotional activity is likely to be prevalent as retailers look to stimulate demand and clear overstocks…
Fitch expects retailers will continue to focus on several ongoing initiatives in 2009 which includes maintaining or increasing market share by emphasizing their value proposition, managing profitability in the face of declining sales, and preserving liquidity and maximizing capital efficiency.
Emphasizing value is the key that I would take away from any of this. It’s time to make customers understand what value they will get from going to you. This is of course a principal that should always be applied to business, but in the hoopla of all the different marketing strategies, it is a theme than can often get lost in the shuffle.
First of all, you’re going to have to continue marketing. Many businesses have opted to significantly reduce their marketing budgets, and unless there is no other way to stay alive, I would not recommend this.
As we discussed before, you’re going to have to look at your marketing strategies, and take more of an initiative to find out what is really working and what isn’t. This involves testing, and may involve some reallocation of your marketing budget.
But no matter where your marketing dollars are going, your marketing message is perhaps the most important element to the campaign. Your efforts will be ignored if you cannot convince your customers that your business is the one they should turn to for what they are looking for. Be clear. Show them where the value is. Show them why you’re better than the competitor.
This is a concept that applies to a much broader range of businesses than just the retail industry, but the retail industry highlights the need based on the information provided by Fitch Ratings. For a full view of Fitch’s findings (which are far more extensive than I have gone into), go here.