Goodbye, store brands. Hello, Nike and Armani. The latest results from Brand Keys Fashion Index show that 29% of clothing shoppers say brand is an important factor in their purchase decision, more than tripling in importance in the last four years. In 2008, when retailers were desperate to sell clothes, only 8% of consumers said they cared about brands. Big gainers in this year’s ranking include luxury brands such as Armani, Versace and Chanel, as well as leisure brands like Nike. Overall, Ralph Lauren/Polo came in at first place. “No matter the category, we see one trend growing,” writes Amy Shea, EVP for Brand Keys, Inc., the New York-based brand and customer loyalty research consultancy -- “the increasing importance of fashion brands. While it’s true that consumers are not spending recklessly, that very reality is what drives them into the arms of true brands.” Lauren was the most-mentioned brand overall, with 39%; a favorite sports team (like those Yankees hats or Red Sox t-shirts) came in second, declining to 36%; followed by Armani with 34% (compared with 32% in last year’s rankings); Nike, with 30%; and Versace and Chanel, tied at 27%. For men, the favorite sports team came in first with 43% (up from 42% last year); followed by Nike, 38% (36%); Ralph Lauren/Polo 36% (35%); and Armani 32% (30%.) For women, Ralph Lauren was tops with 41% of mentions (even with last year’s 41%); followed by her favorite sports team with 38% (36%); followed by luxury brands Chanel 36% (32%); Armani 35% (34%); Versace 33% (30%); and Dior 31% (30%). J. Crew came in at No. 7 with 29%, a big jump from 24% in last year’s ranking. “The rising importance of fashion brands generally, and these fashion brands specifically,” notes Shea, “indicates that value, or the perception of value-via-brand, is of much greater import to consumers, and ultimately, to the success of fashion brands.” Brand Keys bases its ranking on 7,500 respondents, first asking them to indicate the importance of fashion brands, compared to how important they were in the past, and then to name (unaided) the brands that matter most.
People may be using their smartphones as a shopping tool in the stores, but that doesn’t mean they’re buying less from the retailers. In fact, the influence these mobile devices will have on annual in-store sales is expected to increase more than threefold over the next four years. According to a new study from Deloitte, the “mobile influence factor” (or effect of smartphones on in-store sales) on retail purchases will increase to $689 billion (or 19% of total store sales) by 2016, up from the current influence factor of $159 billion (or 5.1% of sales). (Mobile sales, meanwhile, are only expected to be $30 billion at that time.) Further evidence suggests smartphone shoppers are 14% more likely to make a purchase in the store than non-smartphone users. “That might go against conventional wisdom,” Kasey Lobaugh, principal and director of multichannel marketing for Deloitte, tells Marketing Daily. “[Retailers] need to provide the right information and functionality consumers are looking for. It’s really a great opportunity to aid in purchasing.” The spike in mobile influence will likely come as smartphones become even more prevalent among consumers, along with people’s comfort level with the devices. According to the survey, 40% use the device for store-related shopping after they have owned the phone for six months. After using it, however, they consistently use their phones on more than half of their shopping trips. According to the survey, nearly half (48%) of U.S. consumers said their phones have influenced their decision to purchase an item in-store, with usage highest at or near the point-of-purchase in a retailer. More than 60% of them use their smartphones in the store, and more than half have used them on their way to the retailer. Regardless of where they use their phones, people who use their smartphones as a shopping aid are more likely to make a purchase than those who do not. Nearly three-quarters of smartphone users (72%) said they made a purchase on their most recent shopping trip, compared with 63% who didn’t use a phone. The way people are using their phones is of particular importance to retailers. According to the study, 37% of smartphone owners used a third-party shopping application, while only 37% used a retailer’s mobile application. Lobaugh suggests people may not be getting what they’re looking for from the current incarnations of retailer apps. “Most retailers are serving up their Web site on a mobile device. I would argue the Web site isn’t what they’re looking for in the conversion process,” he says. “You have consumers who are trying to make complex decisions. The more information they have at their fingertips the more likely they are to make [a purchase] decision.”
Late to the Greek yogurt phenomenon that’s stealing share from its cash-cow Yoplait brand, General Mills plans to launch 40 new yogurt products in the first half of its new fiscal year, which started May 29. Some of the launches will start shipping next month, including 100-calorie Yoplait Greek yogurt cups (endorsed by Weight Watchers), and Yoplait Fruplait, which claims to have twice as much fruit mixed as the leading brand. Yogurt accounted for 15% of General Mills’ $10.2 billion U.S. retail division in 2011. In its financials report on June 27, the company confirmed that it will be employing a full-press U.S. marketing effort (including TV and other ads, coupons and promotions to generate trials of its new and existing yogurt products) during its current fiscal, although its global marketing budget as a percentage of sales will be about stable with fiscal 2012. (The company spent $914 million worldwide on media in fiscal 2012.) Starting in July, General Mills will also take over U.S. sales of Liberté Mediterranée, a rich, creamy yogurt popular in Canada that currently has about $14 million in sales in the U.S. Liberté is owned by Yoplait SAS, in which General Mills bought a 51% stake last year. General Mills will sell the brand, including its Greek version, under a licensing deal. General Mills will also expand marketing/distribution of Mountain High throughout the U.S. That yogurt brand, which it acquired last year, has heretofore been sold primarily in the Western U.S. However, according to various press reports, some analysts believe that General Mills may have missed the window of opportunity on the Greek yogurt phenomenon. The company currently has just a 6% U.S. share of that segment, versus Chobani’s just-over-half market share, followed by Dannon’s 17% share and Fage’s 13% share. General Mills reported that Yoplait USA’s fiscal 2012 net sales were down 5%, as lower volumes for some established product lines offset “strong growth” by Yoplait Go-gurt and Yoplait Greek varieties. The company’s total worldwide, full-year net sales grew 12%, to $16.7 billion, including seven points of growth contributed by its July 2011 acquisition of the 51% controlling interest in Yoplait SAS and a 50% interest in a related entity that holds the worldwide Yoplait brands. New products generated 5% of U.S. delivery volume during fiscal 2012, with particularly strong contributions from Fiber One 90-calorie brownie snack bars, Peanut Butter Multi-Grain Cheerios and Yoplait yogurt and granola parfaits, according to the company. The company’s diluted EPS was $2.35, and its adjusted diluted EPS (excluding certain items) was $2.56 versus $2.48 a year ago. Significantly higher input costs affected results. General Mills’ fiscal 2013 forecast of EPS of $2.65 disappointed analysts, according to Reuters.
Luxury is back, but with some caveats. For one thing, affluent consumers are less inclined to scarf up such big-ticket discretionary toys as sports cars and full-priced jewelry than they were before the recession. Post-recession luxury consumers are, in fact, more pragmatic, per a new study by market research publisher IBISWorld, which finds that the wealthy are looking for practical luxury. IBISWorld expects certain industries to benefit from this more subdued mien, and to generate more than $1.5 trillion in revenue in 2012 because of it. The study says that the consumer sentiment index, which measures consumers’ feelings about current and future financial stability, fell 25% in 2008 and that it hasn't really recovered. "Consumers will continue in their budgeting ways. Luckily, there are a slew of options available for the price-conscious indulger," says the study. Benefitting from this will be daily-deal sites and channels like Gilt.com, HauteLook.com and RueLaLa.com that offer steep discounts on designer apparel, accessories and shoes. Another beneficiary will be the day-spa and nail salon business, which, per the firm, is stealing traffic from high-end health spas. "Instead of dedicating a large portion of their discretionary incomes to a traditional destination spa experience, consumers have increasingly turned to local day spas and nail salons as a way to pamper themselves on a budget," says the study, pointing out that day spas and nail salons have expanded in metropolitan areas and suburbs over the past five years. Players in the segment are also expanding their experience offerings to benefit from the trend. "For example, hair salon Drybar provides women with $35 blowouts, saving them from having to make a much more expensive trip to an all-inclusive hair salon," says the firm. Health consciousness is also becoming a luxury driver because of the increase in health consciousness and knowledge of genetically modified foods and pesticides. Luxury consumers are buying organics from grocery stores and farmer’s markets. "It is definitely a luxury since organic goods are significantly more expensive than conventional produce in most locations," notes the study, quoting Rodale Institute data that in Los Angeles a 48 count of green onions costs $48 for organic and $10.00 for conventional. The organics boom is also benefiting supercenters and grocery stores with companies Kroger and Walmart increasing their organic offerings just to satisfy customers. High-end reusable grocery bags, expensive natural cleaning products and eco-friendly clothing are also more popular with wealthy Americans. "In order to be eco-friendly, though, you have to have the money for it: Eco-friendly goods are typically more expensive than comparable conventional products due to their more expensive raw materials." IBISWorld says gym memberships and fitness classes are also seeing increases in business because of the same trend. The firm says that since memberships are often pricey, participating in such activities indicates an elevated level of wealth. "Consumers must also have time to spend on fitness and free time can also be a symbol of affluence. As a result, fitness is a luxury people are willing to splurge on," the study says.
Prepaid credit card payment volume will rise 22.4% in 2012 to $247.5 billion, according to Packaged Facts. That’s up from $202.2 billion in 2011, on the strength of almost 10 billion transactions, reports Packaged Facts in a recent report, Prepaid and Gift Cards in the U.S. The gain is due in part to debit-driven regulatory change. However, continued growth will depend on navigating cross-currents of challenges and opportunities, including consumers’ banking dissatisfaction and distrust issues. According to David Sprinkle, publisher of Packaged Facts, consumers dissatisfied with their consumer banking experience are natural targets for emerging prepaid programs. In order to continue to succeed, the industry must strike a balance between checking account profits and migration to prepaid programs. Card companies must increase prepaid cardholder retention, defuse lingering overdraft issues, harness card platforms to best meet the needs of the unbanked and underbanked, and leverage younger consumers’ financial positions while building relationships with them. If a prepaid card product functions much like a checking account but without the fees, consumers who are disgruntled with fees and practices applied by their banks may very well try it. And Packaged Facts’ analysis shows that distrust of banks is rising among groups that are leading prepaid card candidates: Gen Y, lower-income adults, and unbanked/underbanked Hispanics. Frustration cuts both ways: Many banks are using prepaid cards to shed lower-income consumer checking customers, raising public policy issues. Even so, a major challenge for prepaid card issuers is the high rate of product abandonment, combined with the high rate of retention of banking and checking accounts. One way to increase prepaid card retention and drive usage may be to link the cards to direct deposit. Prepaid debit cards are positioned as an attractive alternative to traditional bank accounts for certain segments of the population, particularly those without a checking or savings account and those reliant on alternative financial services such as non-bank money orders, check cashing, rent-to-own agreements and payday loans. As a result of their lack of access to traditional bank services, many of these consumers have historically used cash as their primary payment vehicle. However, the reliance on cash inherently limits these consumers' purchasing power and flexibility. For this portion of the population, prepaid debit cards have emerged as an attractive alternative to cash, allowing a cardholder to participate in mainstream financial transactions by other means. In addition, prepaid cards can suit the special niche of young adults, who may appreciate having a financial services product for which they can qualify and which can meet their relatively narrow financial service needs. The industry is working to find ways to generate profits not only from the prepaid programs themselves, but from the further development of relationships with these consumers over time, according to Packaged Facts.
Summer is here -- and that means automakers are loading their cars, trucks and big tops into 18-wheelers and hitting the road with experiential tours intended to get vehicles in front of people. Kia is hooking up with Vans Warped Tour and Chrysler is taking vehicles to employees; Nissan is on the road; and Toyota is going on the road with this year's version of the "Creation Station." The program launched last year to support the Prius v, but it's bigger this year as it visits more markets and comprises a bigger selection of the automaker's family-oriented vehicles. The Prius v extended the hybrid brand into the crossover segment, so it too was Toyota's first family vehicle under the Prius moniker. This year's tour will also include the Highlander and Highlander Hybrid, RAV4 EV, 2013 Avalon sedan, Landcruiser, Prius Plug-in, Prius c, Sienna and Yaris. The tour starts over the July 4th holiday, and rolls through the fourth quarter visiting fairs, culinary events, and arts festivals nationwide. Beginning at "Fair Saint Louis," it also goes to events like Taste of Dallas, the Eat Real Festival in Oakland, Calif., the Dumbo Arts Festival in Brooklyn, N.Y., and the Jazz Aspen festival at Snowmass. The exhibition, via Los Angeles-based Filter Creative Group, has such elements as the Toyota Cargo Challenge, which demonstrates the load capacity of the Prius v. The challenge gets teams of up to four people to compete to see who can load the Prius v cargo space fastest for a chance at prizes. The program also has arts and crafts, 3D photo opportunities for families, and a giant dice game that emulates the Prius advertising. A Toyota spokesperson says the Creation Station program visited nine events in 2011 and will visit nine events this year as well. "The common theme is reaching families and providing them with opportunities to explore the Toyota vehicle line-up outside of showrooms in a fun and casual atmosphere. Toyota supports a number of programs throughout the year that visit events from music festivals to bass tournaments. Each program is used to market a distinct vehicle lineup and reach a unique demographic. With nearly all of its sponsorships, Toyota seeks to secure category exclusivity, although it isn’t always possible."