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VOLUME 19 ISSUE 01 2011 1 © WSL MARKETING INC. 2011 TIME TO EXHALE? SORT OF... 1 THE RECESSION IS NOT OVER BUT SHOPPERS MOVE ON 2 NEW SHOPPER PLAYBOOK EMERGES 3 FIRST SHOPPERS TO COME BACK 4 LESSONS LEARNED; INSPIRATIONS OBSERVED 5 WHO WOULD HAVE IMAGINED IT? 6 HAPPY EVERYTHING 7 TIME TO EXHALE? SORT OF…. We made it through the 2010 holiday shop- ping season in relatively good shape. People shopped (albeit with lists and lots of coupons in hand). Inventory was turned. Discounts were abundant but planned so retailers didn’t give away the store. In the end, it was a sea- son for most retailers to be satisfied – espe- cially luxury retailers, deep discounters, food and online retailers. Is this a sign that our consumer-led economy is back on track? A sign that Americans will now spend consistently rather than their roll- er coaster behavior of last year? A sign we can now exhale and move on? The answers: Sort of, no and yes… THE RECESSION IS NOT OVER BUT SHOPPERS MOVE ON In our new study How America Shops ® FUTURE SHOP 2011-2012-2013 published in December, shoppers were resoundingly clear: two-thirds said the recession (their recession) would last three or more years. Half said their personal finances would take at least one to three more years to improve, while four out of 10 said they had no idea when. Certainly doesn’t sound as if we can exhale any time soon. And yet… …Shoppers are moving on. In fact, let’s erase “recession” from our vocabulary because shoppers have accepted the new reality of their lives and are moving forward – and fast. They’re utilizing all the lessons they learned in the last three years to shop smarter. This past holiday season showed how they’re doing it. They made lists, checked prices be- fore they shopped, used the Internet as both shopping tool (for information and discounts) and shopping place, spent within their means so they wouldn’t get into debt again, bought mostly what they needed, and a little of what they wanted. And that’s exactly what we can expect from them in the year to come. NEW SHOPPER PLAYBOOK EMERGES Their shopper playbook is clearly defined: 72% now pay more attention to price on just about everything they buy 64% look online for the best prices and discounts before going to stores 61% make shopping lists to avoid overspending 60% stick to brands and stores they can afford for most things they buy 57% use more coupons now than they did a few years ago, and 54% are willing to try products that cost less Source: How America Shops ® Future Shop 2011, 2012, 2013, December, 2010 For every company, retailer or manufacturer, in any category, future success will be based on the following: 1. Substantiating the value of everything you offer shoppers 2. Creating ways to be part of the shoppers’ savings culture 3. Developing ways to get on their shopping list -- for needs and wants 4. Validating why you are worth the price and the trip 5. Using the Internet and digital tools to provide information, service and shopping opportunities -- every day

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VOLUME 19 ISSUE 01 • 2011

1 © WSL MARKETING INC. 2011

TIME TO EXHALE?SORT OF... 1

THE RECESSION IS NOT OVERBUT SHOPPERS MOVE ON 2

NEW SHOPPER PLAYBOOKEMERGES 3

FIRST SHOPPERSTO COME BACK 4

LESSONS LEARNED;INSPIRATIONS OBSERVED 5

WHO WOULD HAVEIMAGINED IT? 6

HAPPY EVERYTHING 7

TIME TO EXHALE?SORT OF….

We made it through the 2010 holiday shop-ping season in relatively good shape. People shopped (albeit with lists and lots of coupons in hand). Inventory was turned. Discounts were abundant but planned so retailers didn’t give away the store. In the end, it was a sea-son for most retailers to be satisfied – espe-cially luxury retailers, deep discounters, food and online retailers.

Is this a sign that our consumer-led economy is back on track? A sign that Americans will now spend consistently rather than their roll-er coaster behavior of last year? A sign we can now exhale and move on? The answers: Sort of, no and yes…

THE RECESSION IS NOT OVERBUT SHOPPERS MOVE ON

In our new study How America Shops® FUTURE SHOP 2011-2012-2013 published in December, shoppers were resoundingly clear: two-thirds said the recession (their recession) would last three or more years. Half said their personal finances would take at least one to three more years to improve, while four out of 10 said they had no idea when. Certainly doesn’t sound as if we can exhale any time soon. And yet…

…Shoppers are moving on. In fact, let’s erase “recession” from our vocabulary because shoppers have accepted the new reality of their lives and are moving forward – and fast. They’re utilizing all the lessons they learned in the last three years to shop smarter.

This past holiday season showed how they’re doing it. They made lists, checked prices be-

fore they shopped, used the Internet as both shopping tool (for information and discounts) and shopping place, spent within their means so they wouldn’t get into debt again, bought mostly what they needed, and a little of what they wanted.

And that’s exactly what we can expect from them in the year to come.

NEW SHOPPER PLAYBOOK EMERGES

Their shopper playbook is clearly defined:

72% now pay more attention to price on just about everything they buy

64% look online for the best prices and discounts before going to stores

61% make shopping lists to avoid overspending

60% stick to brands and stores they can afford for most things they buy

57% use more coupons now than they did a few years ago, and

54% are willing to try products that cost less Source: How America Shops® Future Shop 2011, 2012, 2013, December, 2010

For every company, retailer or manufacturer, in any category, future success will be based on the following:

1. Substantiating the value of everything you offer shoppers

2. Creating ways to be part of the shoppers’ savings culture

3. Developing ways to get on their shopping list -- for needs and wants

4. Validating why you are worth the price and the trip

5. Using the Internet and digital tools to provide information, service and shopping opportunities -- every day

VOLUME 19 ISSUE 01 • 2011

2 © WSL MARKETING INC. 2011

WENDY LIEBMANN | CEO will speak at:

01.25.2011 FMI MIDWINTER EXECUTIVE CONFERENCE

LOCATION: The Arizona Biltmore Phoenix, AZ

02.06.2011 NACDS REGIONAL CHAIN CONFERENCE

LOCATION: The Ritz-Carlton Naples Naples, FL

what “forward” looked like. We noted a new FLAT retail world and how it is fast changing the retail landscape.

“Consider how people shop today. They no longer shop vertically -- trading up and down by brand or retail format based on their income or experience. Now, they shop horizontally.

The recession and technology have fueled a FLAT retail world where shoppers have total (horizontal) access to search out new places to buy, new ways to save, and new information to ensure they don’t make mis-takes when they spend their hard-earned money.

There are 3 layers to this FLAT retail world. On the surface, shoppers skim across all formats, options, brands, in their quest for the smarter buy. Floating above the surface is a technology cloud: a parallel world (the Internet, WiFi) that provides access to all, any time, anywhere (e.g., a smart phone used in-store to check prices, obtain in-formation about a product, that drives the decision to buy or not, on the spot, in the aisle). Hovering below the surface, there’s the third layer: the social shopping world where consumers talk, listen, share, opine and take control of brands, stores, what they buy, from whom, or not.”

Fashion, Beauty and Food are categories where this new FLAT world is already most pronounced. Inexpensive “fast fashion” re-tailers, such as H&M, Forever 21, Zara, Top Shop, continue to force traditional fashion retailers (department and high-end specialty stores, and popular-priced chains like GAP, Ann Taylor, Talbots) to innovate more and faster, and reassess their value proposition.

High-end brands are learning to compete by going more mass. One strategy is alliances that enable a brand to gain broader reach, e.g., Lanvin’s recent collection for H&M and Jimmy Choo (of sky-high heel fame) with UGG (the Australian footwear brand).

Pure play online fashion retailers such as

6. Recognizing shoppers are in control, and rewarding them for that, especially Mom

FIRST SHOPPERS TO COME BACK

A positive sign is the (slowly) improving opti-mism of three traditional economic optimists, Men, Young and Affluent, plus the growing confidence of Minority shoppers.

Men are more confident about their financ-es: 46% say their finances have already improved or will within a year compared to 34% of women. (Did they forget to tell their spouses?)

Younger shoppers are no longer as worried, even if they still can’t find a job: 54% of Millennials (18-34 year olds) expect their fi-nances will improve within a year compared to Boomers and Seniors who remain very con-cerned about their future.

No surprise, higher income shoppers are more confident about their financial future than middle and lower income. Hence, they shopped with gusto over the holidays and will continue to lead the way in 2011 -- but with restraint. Even they don’t want to get into debt again. Even they recognize a good deal. Even they want to be smart shoppers.

The real surprise is African American and His-panic shoppers. Over half say their finances will improve within the year compared to only 34% of Caucasians. Not because they are more confident about the economy but be-cause they have paid down their debt. They feel more in control of their finances and so are willing to spend again, albeit cautiously.

The key is to keep these shoppers spending even as unemployment remains high and gas prices rise.

LESSONS LEARNED;INSPIRATIONS OBSERVED

As we begin the year, we enjoy the luxury of looking back to go forward. In October, in The EDGE, we offered some first thoughts on

Lanvin and H&M collaboration

Ugg & Jimmy Choo collaboration

3© WSL MARKETING INC. 2011

As global retail strategists and shopping futurists, we at WSL/STRATEGIC RETAIL arerecognized for our ability to turn shopper insights into smart actionable strategies.

Since 1989, in our HOW AMERICA SHOPS® studies, we have tracked the mindset, attitudes and behaviors that shape shopper trends, successfully predicting how they transform brands and retailers throughout the US.

Check out our database at...www.wslstrategicretail.com

For more info, contact us at:

No part of this publication may be reproduced without written permission

from the publisher.

212.924.7780

212.924.7608

[email protected]

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And homewares big box Bed Bath & Beyond is testing a L’Oréal Beauty Boutique in one of its NYC stores. And so it goes – FLAT and beautiful.

In last month’s issue of The EDGE, we noted how Food had become a shining star in the FLAT retail world, and gave you examples of how it was being presented to great ef-fect beyond everyday need to drive everyday wants. We’ve added one more retailer to our list of food innovators this month.

France’s Carrefour, the world’s second largest retailer after Walmart, recently opened a new concept called Carrefour Planet with a stun-ning upgrade of its food (and beauty) offer. Beyond its usual mouth-watering fresh pro-duce, seafood, meat, cheeses, wines, it now includes an expanded “Le Bio,” organic and natural products, an alliance with Picard, the French frozen food company (yes, the French do eat frozen entrées), and more. It has en-hanced its broad hypermarket presentation, created a better, more shoppable experience, and continues to emphasize its big box value message.

The next category to be flattened will be Health. It’s ripe for it. The eco-nomics and politics of health means more Americans will soon have health care coverage, and more will have to take care of their health and that of older family members. As a result, more companies will see the potential to innovate in this space.

Already we’re seeing it. Insurance companies, such as Empire Blue Cross & Blue Shield of Florida, are opening health clinics, regional drug chains, like North Carolina’s Kerr Drug, Canada’s Rexall, and in-dependent drug stores are expanding health services, specialty retailers, such as Max Wellness, are adopting a holistic approach to wellness, and food retailers like Wegmans have broken down the walls between grocery and pharmacy offering healthy food right in the pharmacy.

Net-A-Porter, Google’s boutiques.com and Zappos are transforming the service experi-ence, forcing traditional retailers to quickly improve their online and in-store experience.

Consider how FLAT the Beauty world is now. Retailers of every type, including Payless Shoe Source, now offer beauty products, or plan to.

Talk about FLAT Beauty: Sephora, the spe-cialty retailer, has become the incubator of beauty, chaperoning such brands as Tarina Tarintino and Tokidoki to success. It has added a spectacular new store-wthin-a-store concept for MAKE UP FOR EVER in select Sephora stores. It provides JC Penney with beauty “cred” with Sephora Inside JC Pen-ney. And it revolutionized beauty shopping with Sephora.com, one of the best and most shopped beauty stores – brick or virtual.

Prestige retailers have finally recognized the FLAT beauty world. Bloomingdale’s led the way, redesigning its beauty department, add-ed more affordable brands, emphasized hair (Bumble and bumble), and created more self service (Clinique offers shopping baskets so you can shop as in a drug store). Macy’s has added assisted self-service Impulse Beau-ty departments featuring more affordable brands in select stores. UK Selfridges and France’s Galeries Lafayette reinvented their beauty floors with designer dazzle as well as more popular-priced brands and services.

Mid-tier department store Kohl’s just an-nounced it would add a new cosmetics line from designer Vera Wang to compliment the retailer’s exclusive Simply Vera fashion line.

Carrefour Planet Organic & Natural and Beauty department

Make Up For Ever in Sephora

VOLUME 19 ISSUE 01 • 2011

© WSL MARKETING INC. 2011

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lowers -- and the leverage to do it at a great price. Smart...and FLAT.

Do you know where your shoppers are?

HAPPY EVERYTHING

Our heartfelt thanks to clients and friends for helping make 2010 our best year ever. We wish you the best of everything in the coming year. One last thought from Vogue maga-zine’s Lynn Yaeger. She’s writing about fash-ion but her thoughts are relevant to all of us.

“The recession…changed the way people think about getting and spending… Wom-en are increasingly unembarrassed, even proud, of how they mix inexpensive finds with luxury items…

For a global brand to stay relevant, it has to be open to all kinds of adventures… a real desire to become involved in a wider retail world, be it through online shopping, or live-streaming runway shows or collab-orating with lower-end chains…”

We wish you “all kinds of adventures” in 2011.

See you from The EDGE,

Chain drug stores, long the domain of all things health, are now being assailed by the most obvious (mass merchandisers) and the least (all of the above). And shoppers will drive it all.

Welcome to the FLAT world. Are you ready?

WHO WOULD HAVE IMAGINED IT?

If you still doubt we are moving into new re-tail waters, consider…

American Airlines sent a holiday thank you card to customers. An airline saying, “Thank you”… what next?

Gilt, the online sale site, offered three 2011 Jetta cars for $5,995, way below the retail price. All proceeds were donated to Dress for Success, the not-for-profit organization that provides business attire to low-income wom-en entering the workforce. Talk about 2011 relevance – the confluence of a new retail for-mat offering a great deal for the better good.

The New York Times and Zagats (the res-taurant review guide) are selling wine to the newspaper’s readers. They have created a wine club where members buy wines from around the world at great discounts. The companies recognized they had the credibility to sell this non-endemic category to their fol-

NEW REPORT FROM WSL/STRATEGIC RETAIL

• Internet Survey, National sample of 1500 adults • Analyzed by Gender, Generation, Income Group, Ethnicity• 21 Channels | 44 Leading Indicator Categories• Analytic Cells & Workshops also available For more information, please contact us at [email protected] or 212.924.7780