Learning how consumers are spending their hard-earned cash is still an area that companies in the consumer sector are grappling with as they navigate the changes on the retail front.
Just how some companies are adjusting their thinking to meet the changing demands was a key theme at a panel discussion Tuesday night hosted by accounting firm Cohn Reznick’s consumer practice group. The panelists included Karen Murray, chief executive officer of brand management firm Sequential Brands Group Inc.; David Heidecorn, partner at private equity firm L Catterton; Jonathan Murphy, executive vice president for leasing at real estate investment trust Simon Properties, and Joseph Teklits, managing partner at communications firm ICR. The moderator was Stephen Wyss, partner at Cohn Reznick.
Murray said she’s thinking about how and where consumers are spending their dollars so her firm’s umbrella of brands can better reach their targeted consumer base. While she’s still a believer in the brick-and-mortar world, getting the attention of consumers in the current environment is about “more than stacking a bunch of shirts,” the go-to method of stores to showcase goods in years past.
According to Murray, “The focus is on how do you take the storytelling and tap into where the customers are,” adding that the analysis across all brands is not just about how to drive traffic in a store, but online, too. She noted that her company has been analyzing and experimenting with different ideas — one example is the launch of Martha Stewart Cafés — to connect with the customer.
Murray said while she’s not going to put all the brands under Sequential’s umbrella on Amazon, she is analyzing what could work on the site and how best to “control the experience.”
Heidecorn said of his firm, “We are thinking not where consumers are today, but [more about] tomorrow. We spend a lot of time focusing on where consumers will be tomorrow. In the past, we took consumers for granted.” He spoke about exercise bike brand Peloton, an L Catterton portfolio company, and how there’s been much discussion centered on “creating a halo effect” to foster a “stickiness” to the brand.
He also said he’s trying to figure out what the Amazon-Whole Foods merger means for suppliers. “My greatest concern is, what does it mean from a public safety standpoint,” Heidecorn said, explaining that the push for lower prices will put a big squeeze on suppliers, which in turn might want to cut back somewhere and if the wrong choice is made could result in a major mistake.
Murphy said his company is focused on experiences because that’s what’s driving traffic, particularly on the entertainment and restaurant front. “Shoppers used to visit six locations in the mall. Now they shop at three or four. That’s because they are more educated, they do more research before they go to the mall and they are spending their money elsewhere.” He noted that if the apparel mix in the mall goes from 60 to 40 percent, that’s OK so long as one can provide experiences in the mall that keep customers returning to the site.
He also noted that retail tenants tend not to share any data — traffic data or otherwise — with landlords, so companies such as his rely on beacons and other technology to capture their own information on what consumers are doing in Simon’s malls. And to improve the data tracking that’s available, Murphy said his company has “created two $50 million venture funds” to invest in technology companies that are customer-facing so it can better partner with its retail tenants.
Teklits, a former retail analyst, said he’s starting to see an equilibrium fall into place between e-commerce and physical stores. He explained e-tailers are finding it hard to acquire customers online and that it is actually cheaper for them to acquire customers through stores because stores can be both profitable and a driver to the online channel.
He also noted that even though there’s talk about apparel spending being down in the U.S., actual spending is up 3 to 4 percent. The one difference is that the spending is spread out over more brands as consumers now have a wider range of choices than 10 years ago when their options were limited primarily to the store mix in a mall.