NAA 2009: ‘Local’ Is the New ‘Luxury’ in Retail

While retailers are reducing their brand advertising, along with store inventory and head count at their headquarters and stores, promotions, local events and direct marketing efforts are getting a big boost, says TNS Retail Forward Executive VP Dan Stenik, who was speaking at the NAA Annual Convention in San Diego.

Quoting an ancient Chinese proverb, Stenik says “there is an opportunity riding on dangerous winds.” The wildest opportunities may be with specialty stores inside malls, who have been forced to boost their own marketing as the malls themselves lose favor. But they’re going to have a hard time.

More ready opportunities might be with retailers that are in tune with the depressed times, which have brought in a mood of “conscious consumption” rather than “conspicuous consumption” (think green). “They equate frugality with morality,” says Stenik.

The new consumer is into responsible purchasing … things that are “unique, genuine and local,” he says. “They want good, safe sustainable foods. They want ‘limited editions,’ ‘insider information.’ ”

“Local is a luxury,” adds Stenik. “It is not common. The relevance today is in ‘value, values, and being valued.’ ”

Whole Foods, for instance, is state-of-the-art in driving the value of local. The new Venice, California, location has local produce, assortments, a chocolate island, artists, jewelers and designers selling goods inside the store. They have also commissioned murals from a local (and world-renowned) artist.

“Their focus is on the local shopper,” says Stenik. “The common denominator is on ‘relationships,’ ‘trusts’ and ‘collaboration.’ ”

Another hot trend in retail are “pop up” stores like The Bullseye Bodega from the likes of Target and TJ Maxx, which are selling their private-label goods in temporary locations, often around the holidays. “These stores need to centralize and process a lot of advertising over a few weeks,” notes Stenik.

Given these trends, consumer electronics and appliance stores, apparel and shoe stores, drug stores, building/hardware stores and supermarkets ought to do the best in the next couple of years. Home furnishing stores, furniture stores, discount department stores and department stores will have a harder time.

The successful companies will be those that sell lifestyle items that make living fun. Not the products themselves,” says Stenik. “You see retailers getting in to services … drug stores and supermarkets with in-store health clinics. They are building their entire business around it.”