While the idea of a “thinning middle” is one that might appeal to most, in the world of retail, the term has more far-reaching and ultimately negative implications.
This story first appeared in the November 17, 2003 issue of WWD. Subscribe Today.
Such was the subject Marshal Cohen, the chief industry analyst for NPD Group, tackled during his Summit presentation.
Cohen defined the three segments of the fashion business as luxury, midlevel and value. And given the falloff in consumer spending over the last several years, retailers have been looking for ways to sustain their customers’ interests and concurrently grow their business.
For the luxury sector, that means they’ve begun offering lower-priced items and eating into the “middle segment,” according to Cohen. Whereas, the value sector, which includes retailers like Target and Kmart, is marketing up by offering consumers apparel lines from such known designers as Isaac Mizrahi, Mossimo and Thalia — thereby eating into the middle segment again. Or, conversely, they are selling similar fashions at lower prices, albeit with a variance on quality, that consumers are opting for. Hence, the midlevel retailers are being “squeezed” by the luxury and the mass or value sectors. “They are starting to feel the pinch,” said Cohen.
Part of the issue, he said, dovetails into how retailers are advertising.
“The luxury or upper-end market is sending out coupons or direct-mail programs trying to entice consumers through price…so what they are doing is marketing downward. They’re marketing for lower prices, while the lower end of the market is marketing for brand enhancement.
“They are marketing in the opposite direction. We’re watching the upper end market downward and the lower end market upward. We’re watching the whole world of advertising go backwards and topsy-turvy.”
The solution, he offered, rests partly with how vendors can market their lines to retailers to address their concerns and also lure their core customer back.
Cohen emphasized the need to connect with consumers and outlined four basic ideas as to how to accomplish that:
- First, there’s the idea of micromarketing, which is to focus on age segmentation.
“It’s critical to recognize that it’s no longer about sitting there marketing a product hoping that a 14-year-old and a four-year-old are both going to relate to it.”
- There is the importance of understanding consumers’ lifestyles and connecting with them through celebrities and cultural trends.
- Cause marketing is another aspect that Cohen thinks is vital, but feels it should be done on a local level to really impact consumers.
“They should do things like sponsor walkathons in a local community or sponsor fashion shows at a high school,” said Cohen, as opposed to global efforts that have less direct meaning for individual consumers.
- Lastly, Cohen addressed educating consumers on why they should buy a product.
“You have to explain why your brand is more important for them to buy,” he said, which also ties in with telling a story about a brand to make it compelling to the consumer.