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The boss starts the meeting by reporting that your retailers are experiencing a slow start to the season. Weather is partly to blame, but some or your retailers are also complaining about the lack of customer loyalty. Others are relating stories about customers who come in to find out all they can about the right product for them, and then go to the local Wal-Mart to make their purchase, or drive 50-miles one way to shop at a new upscale life-style mall.
"We have traditionally done well with our products and retailers positioned right between the high-end luxury retailers and the discounters" he says, and goes on to point out that "...there are fewer and fewer competitors fighting with us for the middle ground, and we don't have as many retailers to contend with either!" He pauses for a moment and moves on to exclaim, "We have an opportunity here - to dominate the middle of the market and our retailers can't seem to get the traction we need!" The boss lets this sink in. "Marketing - what are we going to do help our retailers win the battle for the middle of the market?"
You and the rest of the marketing team look back and forth at each other and the silence is finally broken by your new marketing director, (the third since the middle of last year) who says quietly, but confidently: "We need to help them get out from between the oncoming traffic before they become road-kill!" She goes on to explain to the boss that there have been profound changes in the consumer marketplace, and the middle ground is either shrinking rapidly, or in some segments has all but disappeared entirely. All in all, she says, the yellow lines in the middle offer no protection, and have become a very narrow, unfriendly place to be.
As the rest of you hold your breath, or exhale nervously, your marketing director goes on to site a recent article on the Retailwire web site, www.retailwire.com by George Anderson titled: "What Can a Dead Armadillo Teach Retailers?" She explains that the author is taking a line from America's self-proclaimed #1 populist, author and radio personality, Jim Hightower who is fond of saying: "There's nothing in the middle of the road but yellow stripes and dead armadillos."
George Anderson sees Mr. Hightower's observation about "the perils of getting stuck between oncoming traffic" as offering a real lesson for retailers and the retail industry in general.
His analogy is that one lane of high-speed oncoming traffic is the high-end luxury market and the other high-speed lane of traffic is the price/value discount market. Both are prospering, and both are growing. So, what about those retailers and businesses that stake out a middle position? The retail industry in particular and all businesses in general have seen more than their fair share of flattened road-kill over the last several years.
We first reported on the perils of being in the middle when we reviewed Trading Up: The New American Luxury by Michael J. Silverstein and Neil Fiske. You might recall that Silverstein and Fiske refer to this same unfriendly place as "middle -death!"
What marketers and retailers have to quickly focus on is the bifurcation, or splitting of the consumer market. This split is not along economic or household income lines. The new consumer-centric marketplace is defined by the same consumer spending money wisely, or finding bargains that allow spending on emotional satisfaction and personal rewards. All income brackets are now bargain hunting or trading down on one hand, and willing to trade up for emotional satisfaction or as a personal reward on the other hand. In other words, today's consumer shops and buys in both the discount and the up-market-luxury lanes of traffic, crossing over the yellow-lines in the middle rapidly and frequently without stopping.
Specialty retail channels of trade, by their very nature have only one direction to go, and it's not down-market. While many specialty bicycle retailers and brands think they are already offering "up-market" products, the average price points reported for the channel indicate that too many retailers, and the brands they carry, are in, or very close to the middle of the market. Prime examples across all but a very few brands are the comfort bike category that consistently averages below $350 a unit and the mountain no suspension category that plugs along with average unit retails below $250, when both categories have the very real potential of moving up-market another $100 to $150 in average unit retail dollars.
Part of the problem we have in fully committing to up-market product, and pricing, is lack of confidence. Unfortunately this leads us to undervalue all but our top competitive and race ready products, and worse yet, ignore whole blocks of potentially highly profitable and loyal clients. This lack of confidence is fueled, in part by not knowing who our potential up-market client base is, and how to connect with them.
If you are stuck in the middle, that is with an average bicycle unit retail at or below $400, because you don't think anyone other than your enthusiast customers will pay up-market prices for their bicycles, or just don't know how to reach out to potential customers who will pay up-market prices for your products and services, consider a very slight change in your marketing and merchandising focus.
Here are just two potential up-market consumer segments that we tend to ignore or discount as not being interested in spending money on real bicycles, along with some suggestions for reaching out and connecting with their up-market and trading up potential.
Seniors (55+) are overwhelmingly interested in living longer, living better and enjoying the experience!
Women of all ages control the vast majority of buying decisions, and are increasingly motivated by the emotional need to indulge themselves in small escapes, looking and feeling better and enjoying the experience!
Make retail stores consumer friendly by eliminating the sea of wheels that define most specialty bicycle retailers, and create lifestyle displays of comfort and comfortable bicycles displayed with accessories, clothing and related lifestyle gear. Use graphics showing seniors, women and families enjoying the cycling lifestyle.
Conduct in-store seminars, clinics or events that you advertise and promote in your community to present and discuss the enjoyment of the cycling lifestyle to everyone, including seniors, women and families.
Ask seniors and women what they like and don't like about your retail environment, and enhance and expand what they like, and eliminate and change what they don't like.
Ask seniors and women what they will spend premium dollars on to enjoy the cycling lifestyle, and take action to provide what they tell you - in products, service and the experience.
Create a unique selling proposition and a risk free offer - along the lines of: "If you don't totally enjoy your cycling experience, we will give you your money back!"
Here's to what we can learn from road-kill: getting off the yellow lines in the middle of the road and getting safely to the up-market lane of retail traffic!
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