AIM clients and friends have asked for information about how to market brands and products to Millennial consumers.  Here is some valuable information from AIM research and from Viacom, an organization which also conducts extensive research with Millennial consumers:

Q: How do Millennials differ from older consumers?

A: Millennials are the largest cohort in history — larger even than the Boomers. They have been groomed to be the ultimate consumers by their parents and marketers and there’s definitely fatigue, but they’re also the best at sniffing out what is not true.  Veracity is the key in all product and promotional efforts targeted at Millennials.

Q: What is the Millennials’ relationship with brands?

A: Brands are something to be skeptical of — guilty until proven awesome might be a good catch phrase, according to Colleen Fahey Rush, executive vice president, strategic insights and research for MTV Networks. That said, Millennials are most likely to align themselves and advocate for brands that they love because the brand has proven itself — this alignment is a form of self-expression — in Facebook or elsewhere.  Millennials have also rejuvenated their parents’ brands in the marketplace, a trend AIM calls “Ping Pong Branding.”  Examples of Ping Pong brands are Apple, Toyota and Burberry, brands that were popular when Boomers were young, abandoned by them, and then popularized by their Millennnial children in a newer, updated version. Consider the Toyota Prius and Apple’s i-products.

Q: How has the recession changed the value of a brand?

A: Brands that had great equity with Millennials at the start of the recession still have it — Apple, Nike, Target — as long as they continue to deliver and innovate. And, it’s a bonus if there is a legitimate cause built in. Categories without an innovative, Millennial-savvy brand have effectively commoditized for them, at least in terms of perception. Value is top of mind, especially for Millennials, 15 percent of whom are unemployed. The Great Recession has permanently shaped the way they think about money, products and brands.  AIM has been monitoring this change in behavior and believes that some of the attitudes will carry throughout life for the Millennials in much the same way that the Great Depression and World War II affected the “Greatest Generation.”

Q: How do Millennials shop?

A: Community — what we call “peer-ticipation”— plays a big part in how Millennials approach shopping; even if they go to a store alone, they’re in constant contact (by phone or mobile web) with their friends, asking for opinions and making decisions based on friends’ recommendations.  According to AIM research, Millennials not only consult the peers they know, but also fully research products online before buying.  Often the purchase itself is made online, but even if Millennials shop at Bricks-and-mortar stores, they do research online first.  And sometimes they use mobile devices and research online while standing in the store aisle.

Q: What part does the internet play in today’s shopping experience?

A: Brands need to have a strong online presence since that’s where a lot of research is done as well as the shopping. Brand’s sites need to be robust web sites that are clean design and easily navigable. As online interactions increasingly influence sales at offline stores, marketers and retailer are likely to better engage shoppers along the full path to purchase, rather than treating online and in-store interactions as silos.  In AIM research, Millennials cite the need for seamless transition from research to purchase.

 

(Editor’s note: Research from both primary and secondary sources from Albing International Marketing LLC and courtesy of Colleen Fahey Rush, executive vice president, strategic insights and research for MTV Networks (MTVN) and her staff across all of the network’s cutting-edge channels including Nickelodeon, VH1 and the venerable MTV.)

For additional information about Millennial consumers, visit AIM's other blog, MILLENNIALS At HOME.

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AIM has believed for quite some time that American companies CAN successfully and profitably manufacture here again and some of our clients - Lodge, Regalware, KitchenAid - are proving us right.  Other consultants  are also noting this trend.  Here's an article from Boston Consulting Group, sent to us by one of our Millennial Movers, Erica Leffler of New York City:

Why Manufacturing Will Return to the U.S.
August 25, 2011
by Harold L. Sirkin, Michael Zinser, and Doug Hohner
 
For more than a decade, deciding where to build a manufacturing plant to supply the world was simple for many companies. With its seemingly limitless supply of low-cost labor and an enormous, rapidly developing domestic market, an artificially low currency, and significant government incentives to attract foreign investment, China was the clear choice.

Now, however, a combination of economic forces is fast eroding China’s cost advantage as an export platform for the North American market. Meanwhile, the U.S., with an increasingly flexible workforce and a resilient corporate sector, is becoming more attractive as a place to manufacture many goods consumed on this continent. An analysis by The Boston Consulting Group concludes that, by sometime around 2015—for many goods destined for North American consumers—manufacturing in some parts of the U.S. will be just as economical as manufacturing in China. The key reasons for this shift include the following:

·         Wage and benefit increases of 15 to 20 percent per year at the average Chinese factory will slash China’s labor-cost advantage over low-cost states in the U.S., from 55 percent today to 39 percent in 2015, when adjusted for the higher productivity of U.S. workers. Because labor accounts for a small portion of a product’s manufacturing costs, the savings gained from outsourcing to China will drop to single digits for many products.

·         For many goods, when transportation, duties, supply chain risks, industrial real estate, and other costs are fully accounted for, the cost savings of manufacturing in China rather than in some U.S. states will become minimal within the next five years.

·         Automation and other measures to improve productivity in China won’t be enough to preserve the country’s cost advantage. Indeed, they will undercut the primary attraction of outsourcing to China—access to low-cost labor.

·         Given rising income levels in China and the rest of developing Asia, demand for goods in the region will increase rapidly. Multinational companies are likely to devote more of their capacity in China to serving the domestic Chinese as well as the larger Asian market, and to bring some production work for the North American market back to the U.S.

·         Manufacturing of some goods will shift from China to nations with lower labor costs, such as Vietnam, Indonesia, and Mexico. But these nations’ ability to absorb the higher-end manufacturing that would otherwise go to China will be limited by inadequate infrastructure, skilled workers, scale, and domestic supply networks, as well as by political and intellectual-property risks. Low worker productivity, corruption, and the risk to personal safety are added concerns in some countries.

This reallocation of global manufacturing is in its very early phases. It will vary dramatically from industry to industry, depending on labor content, transportation costs, China’s competitive strengths, and the strategic needs of individual companies. But we believe that it will become more pronounced over the next five years, especially as companies face decisions about where to add future capacity. While China will remain an important manufacturing platform for Asia and Europe, the U.S. will become increasingly attractive for the production of many goods sold to consumers in North America.

This report, the first in a series, examines the economic trends that point to a U.S. manufacturing renaissance. It also explores the strategic implications of the shifting cost equation for companies engaged in global sourcing.

 

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3:00PM – 4:30PM, Javits Center 1A02-03
What makes your customers tick?  Join Robin Albing of Albing International Marketing for an in-depth explanation into “Millennial” consumers and their buying behaviors.  Subjects will include where they shop, what they buy, how they shop and what their kitchens look like.
The session will be moderated by Bill McLoughlin, editor of Gourmet Insider and executive editor of HomeWorld Business. 
Tickets $20 advance/$25 onsite.

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Albing International Marketing recently conducted a survey of consumers across the US to determine Communication and Media preferences among three adult age cohorts:  Millennials (20-29 years old), GenXers (30-45 years old) and Baby Boomers (46 to 65 years old). 

 

When asked which TWO types of TV shows were of highest interest to them, the leading choice for all age cohorts was “Situation Comedies (such as Modern Family, How I Met Your Mother, Friends).”  45% of Millennials selected this category, 39% of GenXers and 35% of Baby Boomers.  “Cooking Shows (such as Food Network Shows)” were a top choice for 24% of Millennials and 20% of GenXers, but only 14% of Boomers.  “Comedy Shows (such as The Daily Show, Colbert report, stand up comedians) tied for second choice among Millennials at 24%, but were much lower for the other two cohorts (10% and 8%).  On the other hand, 22% of GenXers and 36% of Boomers selected “News or News Shows,” while only 6% of Millennials did.

 

Millennials and GenXers most often get their news “online,” 49% and 48% respectively.  Only 20% of Boomers get their news online. 44% of Boomers selected “Network News - ABC, NBC, CBS” as their main source of news versus 26% of Millennials and 32% of GenXers.  The breakdown for “Cable News – Fox News, MSNBC, CNN” was 16% (Boomers), 11% (GenXers) and 12% (Millennials).

 

When it comes to reading a book, Millennials are the least likely to turn to “Print,” 68% versus 81% of GenXers and 83% of Boomers.  Millennials are the most likely to turn to all types of electronic resources (laptop or desktop computer, e-reader, iPad, Mobile phone).

 

All cohorts use email to a large extent (84% of Millennials, 81% of GenXers, 77% of Boomers).  Texting, Twitter, Facebook, other social networks and blogs are used by significantly more Millennials than the other two cohorts.  LinkedIn and Print Magazines are used most by GenXers.  Print newspapers are used most by Boomers. 

 

For more information about this survey, contact AIM at aim@albing.com.

 

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Robin Albing, AIM President and CEO, will participate in the upcoming Tuck India Business Conference at the Amos Tuck School of Business, Dartmouth College.  Albing will discuss opportunities for consumer good marketers in the mass market in India.  She will also share anecdotal information about successful (and unsuccessful) strategies for market entry into India.  The conference is scheduled for Friday April 29, 2011.  For more information, see the Tuck website.

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With rising labor costs in China and consumer concerns about quality/safety issues, companies are starting to look at US manufacturing.  Take the time to listen to this informational segment on NPR's "Here and Now".  We were especially interested in the interview with Mark Dwight, the founder of SF Made.  He describes "value-added manufacturing," which starts with off-shore sourcing of basic product and finishes the product with added design and high-quality features.  "Finding a 'pure play' Made in USA is increasingly difficult.  It's a global economy...but should I (a manufacturer) be penalized just because a certain component is not made in my own country?  That's a radical extreme."

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This is good news for our clients in the stemware business!  "A new poll shows vino is the drink of choice for 24% of 21-34 year-olds. The generation still prefers beer (at 37%), but more prefer wine compared with older Generation X drinkers (aged 35-46), who choose beer to wine by 41% to 16%, according to The Harris Poll. Drinkers tend to shift to wine and spirits as they get older, so if the trends hold, Millennials are likely to be pleasing the wine industry for years to come."  Read the full article on the Ad Age Blog.

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We survived safely in spite of incredible and inexperienced shaking, although some material damages for glasses, plates and pots etc.
were unavoidable at our home.
The earthquake of unusual level of 9.0 magnitude originated about 300km north of Tokyo, yet we suffered from a serious disruption in transportation system, required for safety check and went on out of service until next day. Massive commuters in center of Tokyo were obliged to walk a long way back home or stay for overnight at work places. Luckily, we stayed at our home at the time of incidence.
Now, we are confronted with a serious concern about spread of radioactive owing to damages of nuclear power plant, at some 250km
distance north-east from Tokyo. We still need watch carefully further development.
Further, we encounter with short supply of electricity (reportedly 25% reduction of supply capacity due to quake damages). It started from yesterday morning to implement electric power sharing program by
suspending electricity service couple hours a day in rotation by region and time zone. It caused quite serious confusion for railway operation, retail services and industrial activities.
Most schools and retail outlets went on closing yesterday.
Stock exchange market yesterday and today marked a significant dip consecutively. Everything so far appears unpredictable.
We hope to keep ourselves a positive attitude for an early return to normal life as soon as possible, but at the same time we realize a need for good patience to tackle the confronted difficulties ahead.
Best personal regards,
Kiyo

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1.    Nespresso Pixie 

2.    Black + Blum Hot Pot BBQ

3.    HoMedics charging bags

4.    Capital Brands Baby Bullet

5.    Thermos UnderArmour Hydration Bottles

6.    Casabella Keith Haring 

7.    iSi Twist N Sparkle 

8.    Evolution Robotics Mint Automatic Floor Cleaner

9.    Zebag Wine Caddy and Rack

10. Dansk Light Mario Batali cast iron cookware

 

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Many years ago, as a student of archaeology, I made my first trip to Egypt and was so moved by the treasures of the country's past.  My visit in 2009 was another memorable experience.  Not only did I visit the incredible archaeological sites, but also established friendships with many wonderful people. I sincerely hope that this latest change continues the proud tradition of a very noble land and the people who live and work there.  -Robin Albing

Although we recognize that there are many challenges ahead and it will not be easy,  all of us at AIM send our wishes to our friends that the new Egypt will be a land of opportunity for all people.

The following are excerpts from just two of the emails that we received this week from our friends in Egypt:

We are all confident that the future is going to be better. We can feel it in the air, in the attitude of the people towards each other, in everything. Let me tell you that we feel a new EGYPT is born because this country with its treasures made by its own people since ages, deserves to be in a better rank within the biggest civilized and developed nations in the world.  I fully share your thoughts and pray that the new Egypt with its young generations who managed to make what no other Egyptian could do in the last 20-30 years is coming to be prosperous, developing and peaceful land same as it used to be ages and ages before.  - Mahmoud Rushdy (Deputy Executive Director | Egyptian Exporters Association-ExpoLink)

And from free-lance writer, Randi Danforth:
Back in Cairo...Yesterday (Monday 14th) I went to my office for the first time since 27 January, where there were more demonstrations suddenly down in the street--we are right on Tahrir...Around Tuesday the 31st ( I think ) I was interviewed for a NY Times article, including a 2-minute audio:

Randi Danforth, 56, an editor for American University in Cairo Press, has been reluctant to leave, partly because of her cat, Stella, but she booked a flight leaving Wednesday. Until then, she remains in Maadi, a comparatively wealthy suburb south of Cairo where many foreigners and well-off Egyptians live.

“I have been calm and reasonable about everything, but uncertain of what is going to happen long term,” she said. “There have been no demonstrations in Maadi, but what people are concerned about are opportunists and thugs. There are rumors going around of home invasions and looting. In fact, we have seen little of that ourselves.”

Ms. Danforth said tanks were positioned on key roads and that security guards were patrolling her apartment building. The 60 or so residents have been gathering in the garden to trade information. Some neighbors have armed themselves with baseball bats and golf clubs.

 

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On August 25, 2010, our friend and consultant, Kitty, learned that her 8-year-old daughter, Alicia, had a brain tumor. For Kitty and her husband Juan, this was the worst moment of their lives, but thanks to a world-class hospital and her incredible team of doctors and nurses, Alicia received the best possible care.  Following surgery, it was determined that Alicia’s tumor was not malignant, but she still had to undergo 13 months of chemotherapy. This took some getting used to for her parents, but Alicia, as always, set a great example for everyone. One night when chatting before bed, she said to her dad “I’m kind of scared, but I’ll do everything I can to get better as quickly as possible.” Her courage is an inspiration to us all and in early November, she celebrated her 9^th birthday. Alicia is doing well under the circumstances and she is determined to see that other children are also able to receive the best possible treatment, and so are we at AIM. For this reason, we have made a donation in the name of all our associates, clients and friends to the Childhood Brain Tumor Foundation in honor of Alicia.  Please visit the CBTF website to learn how you, too, can help.

 

Best Wishes for 2011!

From Albing International Marketing

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In the latest Allstate/National Journal Heartland Monitor poll, when asked which nation now has the world’s strongest economy, just 20 percent picked the United States.  More than twice as many (47 percent) picked China. Eleven percent chose Japan. White working-class voters were the most pessimistic: Just one in seven of them placed the U.S. atop the list; half named China. But the pessimism was widespread. Almost half of both college-educated whites and minority adults also tabbed China as No. 1. Americans who consider themselves politically independent were especially downbeat (53 percent went with China), but both Republicans and Democrats were also twice as likely to name China as the U.S.

 

Few economists would second that judgment. China this year became the world’s second-largest economy, but the U.S. gross domestic product remains more than two and a half times bigger than China’s, according to the International Monetary Fund. On a per capita basis, the advantage is nearly 11-to-1. China’s economy has grown much faster than the U.S. for years, however, and Beijing has amassed an enormous surplus in its international accounts while accumulating huge amounts of U.S. government debt.

 

Read the full article.

 

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In today's online NY Times, Timothy Egan posted an interesting blog.  He posited that President Obama needs to come up with a simple, (not grandiose) "big idea" to show that he "is on the side of average Americans, who, in turn, must believe the country is moving in the right direction despite a painful economy." What’s needed, is “to do what Americans have always been known for: building, innovating, making things.”

The U.S., as a country, had better come up with a Big Idea...and soon!  I just returned from Shanghai this week - my first trip to China in several years. Chinese progress in infrastructure and technology is impressive, especially in light of our own crumbling roads and bridges and our inconsistent electrical grid and telecommunications.  The Chinese young people I met with were intelligent, SUPER tech savvy and hungry for success.    They were NOT, however, creative and innovative thinkers.  They had genuine difficulty thinking outside the box.  And as a generation of only children, they had poor interpersonal skills and lacked empathy.  All of this bodes well for the next generation of Americans if someone can capture their spirit of optimism and provide them with a blueprint for the future.  In my experience, American young people are multidimensional thinkers and, after the jolt of reality provided by the Recession, are ready to work hard.  But they are waiting - waiting for inspiration and that Big Idea...We can't wait much longer.

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For the answer to this question, please visit our NEW sister Blog, MILLENNIALS At HOME at http://millennialsathome.blogspot.com.  And be sure to comment...

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In a March 2010 AIM online survey of over *500 US Millennial home owners/renters, we found that 83% are at least somewhat concerned about the current state of the national economy.  Only 5% are not concerned at all.

Yet, 63% hold an optimistic view for the near future.  Twenty-two percent “hope” that 2010 will be better than 2009, while 41% think 2010 will be challenging, but that things will “improve in the second half.”  An additional 10% are optimistic for the long-term, saying that it “may take a long time (2-5 years),” but “we will be better off” eventually.

This is not to say that Millennials are NOT concerned about the economic situation, however.  When asked whether economic concerns would impact their spending plans this year, only 17% said it will have "little or no impact." 

*Randomly selected per US geographic distribution, ethnicity, and gender distribution.  Age 20-29 years.

 

MILLENNIALS At HOME

Millennials make up almost a third of the U.S. population.

Their spending power already exceeds $300 billion.

They will fundamentally change how you do business in the future.

-What will their homes look like?

-And what products will they buy to fill those homes?

A groundbreaking study from Albing International Marketing LLC, the research leader in the home furnishings industry.

To be published April 2010

For more information, call (908) 788-5411 or email ralbing@albing.com

 

 

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Last night was a night that gave me hope for America. 

 

2010 has been pretty depressing so far – unemployment is still sky high, change isn’t happening fast enough, no one in Washington seems to be able to get along, and it seems like the “anger” that a lot of people are feeling could ignite some real violence.  Europe is in financial turmoil and China owns all our debt…    

 

And yet, a 23-year-old kid, who just happens to own his own mountain, provided the lift we all needed. For those of you who didn’t watch the Olympics last night, a daring redhead showed us what America is all about – innovation, creativity and guts.  Shaun White not only won an Olympic gold, but he did a trick that he didn’t have to do in order to win!

 

Both Lindsay Vonn and Shani Davis showed strength and determination yesterday in their respective gold medal races, but Shaun White was my personal favorite.  He’s kind of crazy and optimistic, in a wild, young sport and he loves to push the envelope.  As I watched him approach his final run up the side of the halfpipe, he had already clinched the gold and he had very little height…surely he would NOT try his new trick?  And yet he did it anyway - the incredible "Double McTwist 1260" - which involves two off-axis backflips while doing 3.5 full rotations, all in one jump.  Then he iced the landing, finishing with a huge smile.

 

It’s the Millennial Twenty-Something kids like Shaun and their daring spirit that are going to lift America out of these challenging economic times.  The willingness to create and try new things is what makes this country different during each succeeding generation and gives me hope for the future. 

 

And next time some snowboarder cuts off me off while skiing, instead of cursing to myself, I am going to be thankful that we have kids who are willing to try new and challenging things.

(For more information on Millennials, AIM's new study MILLENNIALS At HOME, will be published in April.  Contact info@albing.com for details.)

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It’s a snowy day here in New Jersey, in fact, so snowy that I am working in my kitchen at home.  It’s a perfect day to sift through the mountains of material that we have been collecting for MILLENNIALS At HOME, AIM’s in-depth look at consumers now in their Twenties.  This group already has more than $350 billion in spending power and that is going up every day as more and more young people enter the work force.  We’ll be doing more primary research over the next month, but even the materials gathered so far make for some fascinating reading.  I thought I knew a lot about this generation since I have three Millennial kids, but I am learning a lot.  For example, I knew that they love to shop online, but did you know that Millennials are also three times as likely to buy from an infomercial as someone my age (Boomers)?  Or that, even though they love to shop online resources (like amazon.com) for many items, they rarely consider it for kitchen items and are 25 times more likely to shop at a discount store like Walmart or Target.  (These stats came from some research AIM conducted late in 2009.)  Stay tuned as we delve deeper into these issues and continue to report on our findings…

 

Also, be sure to stop by the Design Center Theater at the International Home & Housewares Show on Monday March 15^th where I will be previewing MILLENNIALS At HOME at 11:30 AM.  

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My kids are always accusing me of being cheap.  In fact, they claim that the recession has just provided me with a convenient excuse for saying "no" and for cutting back on their expenditures.  Maybe... but our research among US consumers has indicated that I am not alone and that we have become a nation of cheapskates.  And being cheap has become a badge of honor.  Finding a bargain not only makes sense, but it is fun.  That's the reason consumers tell us they like to scour tag sales and downscale antique (junk) emporiums.  It's also why they love retailers like TJ Maxx and Home Goods where they have to sift through the clutter to find the "good stuff."  AT AIM, we call it Treasure Troving and it's a major trend that is likely to stick around even after the economy recovers.  Why?  Because Cheap Chic seems to be trickling down from Baby Boomer parents to their Millennial kids (now in their late teens and twenties).  And these young people may just carry their thrifty spending patterns, developed during the Great Recession, throughout their lives just as their Depression Era grandparents did.  In AIM's research, the Millennials are telling us about how they scour the web for bargains and then brag about it to their friends, who in turn also visit the same sites seeking deals.  The internet has expanded bargain shopping beyond the traditional concept of "sale" to best price/best product all the time.

Interestingly, Cheap Chic and Treasure Troving are not just American trends.  Just as the economic downturn affected all economies to a certain extent, so, too, has Cheap Chic permeated even the most brand-conscious and status seeking shoppers abroad.  Japan, with half the population of of the US and less land than California, has more than twice as many Burberry, Hermes, and Prada stores as all of America.  Luxury labels fuel a $20 billion-a-year market, yet according to an article in Newsweek (citing a McKinsey report), for every one luxury (brand) bag, there are 10 Uniglo, Forever 21 or H&M bags."  The report claims that there are several reasons in addition to the Recession for this shift and that "upscale marketers should not give up on Japan, but they should adjust their expectations: an economic recovery will help sales rebound, but the fact is that some former luxury buyers may have traded down permanently."  (See Newsweek 9/28/09, "Japan's Cheap Chic")

We have the same advice for our clients in the luxury goods category of the home market.  There will always be a small percentage of the rich who will demand luxury brands and highly priced goods, but the acceptance of Cheap Chic is likely to decrease the overall size of the luxury goods market for at least the next ten years and maybe longer.     

At AIM, our clients have asked us to delve into the mind of the Millennial consumer.  We have embarked on a major effort over the next 12 months, MILLENIALS At HOME, a combination of both quantitative and qualitative research.  If you want to learn more about these consumers, or if you have information you would like to share, please contact us at millennials@albing.com.   

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Here is a link to today's NY Times article which highlights the outcome of this month's election in India:

http://www.nytimes.com/2009/05/18/world/asia/18india.html

We will continue to post how these political conditions are likely to affect the economic situation and the potential for business in the Indian consumer goods market.

 

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AT AIM, we are watching the month long elections (that started last week) in India with strong interest.  We are particularly interested in how the elections might affect India’s overall economic situation which has offered so much potential for US consumer products companies over the past several years.  So far, so good.   

 

From the BBC:

 

Under the headline "Ballots stronger than bullets", the Times of India said that the high turnout was a "celebration and an affirmation" of the country's democratic ideals.

It also praised awareness campaigns over the past few weeks that encouraged middle class urban voters "to step out like never before to vote".

"Neither the blazing summer sun nor extremist gunfire could keep away the voter from the booth," the paper said.

It said the turnout was a setback for Maoists and other extremist groups who saw "a successful electoral democracy as a negation of their political beliefs".

 

To better understand the players in India’s elections, we recommend visiting CNN’s website:

http://www.cnn.com/2009/WORLD/asiapcf/04/17/india.election.explainer/

 

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Over the past two days in the course of research for a project, I visited two leading upscale retail venues.  What I found was surprising…or maybe it wasn’t.  As a trend watcher, I wanted to learn if people are still shopping in light of our current economic crisis and if so, what are they buying?

 

I visited the Short Hills Mall, a very upscale shopping center not far from Manhattan in a New Jersey suburb inhabited by a lot of Wall Street executives.   And I also spent time at The Crossings Outlet Center in the Pocono Mountain region of Pennsylvania.  The Crossings houses an array of upscale factory outlets like Ralph Lauren, Coach and Burberry.  On Sunday, it was packed and people were shopping like there was no tomorrow.  Why?

 

1. Because there is no tomorrow?
2. Because the economic situation doesn’t affect people outside the New York to Washington corridor?  (Most auto plates were from Pennsylvania)
3. Because outlet centers are where people turn for discounts in an economic downturn?
4. Because it was a holiday weekend and they were running incredible promotions?

 

I spoke with a number of salespeople and they said business was very good, although they were not sure it would be as good as last year.  The promotions were deeper and they were surprised that people were still signing up for new credit cards to get increased discounts.  I was surprised that banks were still letting people sign up for credit???

 

The consumers were buying everything.  Clothing and accessories were every bit as popular as home goods and gourmet food.  At the Coach outlet, I watched one woman buy five handbags.  She did not appear particularly affluent and I asked her why she was buying so many.  Was she perhaps doing some early holiday gift shopping?  No, she just recognized that the prices were very good and she just loves Coach…I asked another young shopper who appeared to be in her Twenties if she was concerned about the economy and she said that her job was “not affected by the economy.”    

 

On the other hand, Short Hills was like a tomb yesterday, despite the Columbus Day holiday and the prevalence of promotions.  I spent a lot of time at Neiman Marcus chatting with one of the department managers.  (He didn’t have anything else to do…)  He said that the store “traffic died when the stock market started plummeting.”  And, despite yesterday’s rise on Wall Street, people had yet to return to the stores. 

 

The high end designer shops at Short Hills like Gucci, Fendi, and Jimmy Choo were particularly empty.  The only action in the mall was at the chains like JCrew, Williams Sonoma, The Gap, and the only department store with traffic was Macy’s. Shoppers at J Crew were snapping up a lot of promotional items, especially sweaters and accessories.  At Williams Sonoma, they were buying gourmet food items and small cooking tools like cookie cutters and bread molds.  (All of these items fall into the category of “small indulgences” and we will examine this trend in a later column.)  The designer shops were begging for business.  Every time I walked in, the sales people were all over me.  

 

Of course, the economic crisis is now over (hah!) so maybe people will start to shop again…OR will upscale/luxury consumers shift their shopping downwards to more affordable retailers and more affordable venues, like outlet centers?  And if the upscale consumer is shifting downward, what will less affluent consumers do?  Shop only at Wal-Mart or stop shopping altogether?  We, at AIM, will be out in the retailers monitoring the situation and will keep you posted… 

 

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Last week in the NY Times, Paul Krugman wrote a column called “Stranded in Suburbia” and it got me thinking about what “home” is going to look like for a lot of us aging Baby Boomers over the next few decades.  At AIM, the most important thing we do is monitor trends for the home and predict trends in an effort to help our clients develop the best and most successful products for the home. 

 

For those of you who aren’t familiar with Krugman, he is, in addition to a columnist, a professor of economics at Princeton and is known for his progressive (yet globalist) politics.  (Some of my friends say he is way too liberal, but today’s column was relevant to the home products business, regardless of your political point of view.)  The gist of the op-ed was that while we’re “supposed to see the future in China or India,” “old Europe” has a lot to teach America about how to exist in a world of increasingly high fuel prices.  Krugman goes on to describe the city-centered model found in Western Europe where people own smaller and fewer cars.  Europeans also do not need to use cars as often because they have a sophisticated system of public transportation and they live much closer to urban centers.  In the US, on the other hand, we live in far flung suburbs and have grown dependent on our SUVs and big cars.  Krugman says it won’t be easy to make any kind of societal shift to the European system because pleasant urban neighborhoods are not as common here as in Europe and there is a “longstanding American association of higher-density living with poverty and personal danger.”  In America, there is also an issue of race and class.  We tend to think of cities as dwelling places for the rich and the poor; the middle classes live in the suburbs.  And infrastructure is another large problem – even our best served metro-centers are far behind Europe in terms of public transportation.

 

So all this got me thinking about the home of the future and where I myself might like to live in a few years when I am an empty nester.   We have been increasingly hearing people in our research at AIM talk about moving back into urban areas.  And these people are not just young twenty-somethings.  They are growing families and they are “older folks” like me who cite the lack of culture and inconvenience of the suburbs.  They are weary of cutting the grass, painting the house, and getting in the car to go everywhere.  (After years of trying to squeeze it in between my kids’ sporting events, I am even tired of my garden.)  In our area, we keep seeing ads in the paper for high rise condominiums on the New Jersey side of the Hudson and for townhouses in Center City Philadelphia.  Other trend watchers such as Age Wave and builders like Toll Brothers are predicting an “insodus” - the opposite of exodus - back to the cities.  And not just on the two coasts, but also in places like Kansas City and Minneapolis and Houston.  Across the country, developments and high rises are cropping up to accommodate this movement, offering hotel-like amenities such as room service, dry cleaning delivery and in-house fitness centers.  So if this is a viable movement, we would like to learn more about it from consumers on our blog…Is this appealing now or later in life?  What amenities would draw you to the city?  What would you leave behind?  What would you want to buy?  We’ll be exploring this more in our research, but we’d like to hear what YOU think…     

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Yesterday, I went to the mall to buy my son a new iPod for his 14^th birthday.  It was around dinnertime and a beautiful day so maybe that's why the mall was so empty.  Maybe, but I really don't think that's the reason.

 

According to AIM's recent Internet survey of consumers across the country, the economy is significantly affecting consumer behavior and priorities.  65% of those we surveyed said that current conditions are affecting their spending for the home. Since AIM specializes in the home and home furnishings products, we were especially interested in home spending, but we also found that the economy is affecting personal budgets for food, clothing, and travel as well as for home improvement, furnishings, and entertaining.  Next week we will have more of the statistics from our survey on the Blog, but today I wanted to address my trip to the mall because I saw something else at the mall that gave me room for optimism.

 

As I said, the mall was empty.  All except for one store - the one store where I was headed - the Apple store.  And it was packed.  The customers in the store were mostly young, but not entirely.  Some of them were Baby Boomers like me and they were buying computers, iPhones and iPods for themselves (not just for their kids).  Apple has created and exploited a business model that other American companies should be emulating.  They have concentrated on design, innovation and brand marketing.  As a result, they are the acknowledged leader in their product categories.  According to Fareed Zakaria's new book, The Post American World and an Atlantic Monthly article by James Fallows, Apple is operating according to the "Smiley Curve" and they are generating substantial profits.  "The 'Smiley Curve,' named for the U-shaped smile on the simple 1970's cartoon of a happy face, illustrates the development of a product, from conception to sale."  At the top left of the curve are the idea, the high level industrial design and the engineering.  At the bottom of the curve are manufacturing, assembly and shipping.  Rising up on the right side are distribution, marketing, retail sales, service contracts, and sales of parts and accessories.  Companies like Apple that concentrate on the high sides of the U are operating where the profits are, while those that concentrate on the low part in the middle have a much lower potential for profit.  Like Apple, a lot of US companies are manufacturing overseas in low cost countries, but many of these companies are only concentrating on the low end of the curve.  Most of them are not very good at the high sides of the curve - especially design and innovation - where the process begins; nor have they concentrated on brand identity and reinforcement of the brand at retail.

 

If companies want to make it through this downturn or recession or whatever it is, they are going to have to differentiate themselves by concentrating on both of the high sides of the "Smiley Curve."  They can't survive by just concentrating on the low middle, by finding a lower cost source of supply.  As the cost for fuel and raw materials rises, the cheap sources of supply are drying up.  And they can't succeed by concentrating on only one high side of the curve.  Like Apple, to survive and succeed, during not only this period but also in the global marketplace of the future, will require an emphasis on both high sides of that "Smiley Curve."

 

Wall Street analysts are concerned that Apple may be vulnerable to slowing consumer spending in the United States because of its stronger presence here than overseas and because many of its products carry a premium price tag.  But if the crowds in the stores are any indication, I think they will weather this economic storm just fine.  Our AIM consultants report that the Apple stores in New York, Washington and LA are packed with foreign tourists, buying multiple iPods and Macs to take home.

 

As I said, my local Apple store was full of shoppers yesterday and they, too, were spending money.  When I purchased an iPod for my son, I was surprised to be asked for my email so that they could send me my receipt.  Of course, I understand that I will now forever be bombarded with emails from Apple.  And I was also faintly uncomfortable walking out without a paper receipt, but I couldn't resist the urge to join the paperless world.  I am now a loyal Apple consumer and I might even consider a Mac for my next laptop!  (More on this for another day...)

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News about the US economy is not good.  Some say we might even be headed into a situation similar to Japan’s in the 1990’s.  (Twenty years later, Japan is still struggling with the bursting of their property and market bubbles.)  In order to counter the downturn, the US government has initiated an aid package aimed at maintaining unsustainable high rates of personal consumption.  As a business person and a consumer, I have problems with spending to “save” the economy.  It’s like buying drinks for an alcoholic.  It seems like a very short term strategy for some long term problems like industry shifts, crumbling infrastructure and massive debt.  I’d rather see an investment strategy, an innovation drive and a more global point of view.  And apparently I am not alone with this point of view.  On today’s NY Times Op-Ed pages, Stephen Roach, Chairman of Morgan Stanley Asia, states, “A more effective strategy would be to try to tilt the economy away from consumption and towards exports and long needed investments in infrastructure.” 

At AIM, we are very involved in helping our clients sell into the hot growth markets such as India, China and Poland and in re-visiting markets on the upswing (again) like Japan.  India is now the world’s second fastest growing economy with a huge population of eager shoppers (600 million upscale and mid market consumers) and the hottest retail market in the world.  Yet, as a culture, Indians still have a creativity gap.  The most prestigious careers are still engineering, medicine and investment banking.  The country needs more designers, writers AND creative salespeople.  And more creative and well designed product.  Smart marketers from the US are seeking to fill this gap in India (and in other markets).  And they will certainly profit from this effort, whether their products are actually made in the US or manufactured in Asia using American design and know-how.  Too bad our government doesn’t help more with this export opportunity instead of merely providing Americans with a free check for spending on more imported products here that they don’t really need…

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Robin Albing, AIM's President, presented "The Green Kitchen - Fleeting Fad or Long Term Trend?  Implications for the Future" on Sunday March 16th at  the International Home & Housewares Show in Chicago.  For a copy of her presentation, contact us at info@albing.com.

Visit Housewares.org for more info

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