The tumbledown effect

Internationally, and in our own local areas, shoppers are walking into stores they’ve never entered before. If they’re not getting extreme value or service in their usual haunts, they will seek better value elsewhere.  Luxury shoppers will turn to middle market, and middle market shoppers will turn to the strongest discount stores. It’s the tumbledown effect, and it’s happening in Britain and the US en masse.

Retailers and brands in the upper value echelons are focusing their service and special offerings on their key – and most loyal – customers. It keeps them close. Australians owning a Mercedes Benz or Lexus will have recently received an invitation from their local dealership to see limited demonstration models at discounted prices. Similarly, frequent users of high end department store cards will have been invited to exclusive after-hours shopping events with very compelling offers to support a great shopper experience.  And in return, these customers are staying with them.

Those luxury stores and brands not delivering on these motivators lose their shoppers, who “tumbledown” to a new – and better value – shopper experience in the middle market.

There, it’s the compelling and regularly refreshed product range, coupled with an excellent service offering, that makes middle market stores successful. The well run are doing very well at present, providing these key offers and benefiting from the tumbledown effect from the luxury bracket.

Regular shoppers want entertaining; they want to find a small haven of pleasure in a sea of bad news. Remember, it does actually feel good to shop for even the smallest of luxuries if the shopper experience is a good one.

The shopper experience at Woolworths and Coles’ most renovated modern stores is world class. Australia’s love affair with “fresh daily” is pretty unusual around the world, meaning we shop more frequently than many nations. We like to shop.

Furthermore, in the new Target and Big W stores the bright, entertaining environment is something of a surprise for the “tumbledowns” from Myers or David Jones who may not have entered a discount department store for some time. They can be pleasantly surprised with the range and quality of brands and the store environment and, most importantly, enjoy the experience. Guess what, they come back.

Then, things really are on fire for the best players in the discount end of the market, and there tends to be only one stand-out player in this sector in each market.

The best offers very low prices via a small range of brands in a consistently pleasant, but not a premium, store environment. These retailers spend very little on television commercials, so consumers tend not to think of them unless they already shop there. This market builds retail brands from the shelf back to the shopper’s home.

In Australia our stand-out is Aldi, and in the US there is Wal-Mart, and both are working hard to ensure that the “tumbledowns” passing through their doors right now love the experience and return again and again. This economic period is the greatest opportunity for sustained growth these retailers will see in a decade.

In Australia Aldi is accelerating its new store openings. Woolworths and Coles are responding by re-investing in their stores – they don’t want their customers to leave them for the new Aldi threat.

In the US, Wal-Mart is slowing its new store openings, but investing heavily – very heavily – in existing store re-fits and lifting the shopper experience.

Its latest project, which Crossmark in the US has been engaged in developing, is improving customer software, high end event areas and training over 3000 in-store event staff – working with brands to bring products and stores to life for the customer. This is a huge shift in customer experience.

And the effect?  Wal-Mart shoppers stay loyal, and customers who have never before entered a Wal-Mart are loving it and coming back.

And all this investment in a global economic downturn.

The smartest always succeed. See, every cloud has a silver lining.