More Thoughts on Retail

Watch the following video from the Harvard Business School. It speaks to consumer behavior and marketing in recessions.

Professor Quelch in it says that recessions are the time to “expand your voice” through marketing. It is also a time for redefine or entrench your message with consumers as picking up 1 point of market share in a recession is much cheaper than in an upswing. It is during recession that consumer behavior becomes entrenched.

Quelch says, “Recessions are not a time to hunker down….”

This goes back to my post from last week on Target (TGT), Wal-Mart (WMT) and Sears Holdings (SHLD).

Wal-Mart is using the recession to hones its value message with consumers and the results have been nothing short of perfect for them. Sears is using it to redefine itself and the best place for consumers to shop for appliances and it is working as they have picked up market share for three consecutive months there.

Wal-Mart’s message since before the recession started was “Save More…Live Better” and it has resonated with consumers. It re-routed billions of dollars from expansion to improving the look of aging stores. It has a new focus on electronics and is now currently selling Apple’s (AAPL) iPhone.

Sears, while not blanketing consumers with messages, has been very pointed with its “Blue Crew” appliance folks and the price guarantee that allow the consumer to search the internet at Sears to assure themselves they are getting the lowest price. It has spent money improving and rolling out a top notch website tp increase its web presence. Both are working.

Can anyone tell me what Target has done during the current downturn to capture market share or in this case just keep up with Wal-Mart? Target used to be a “nicer WalMart”. It was viewed as cleaner and almost as affordable. Now that Wal-Mart has improved its stores and brought in better merchandise, Target is just viewed as “a more expensive Wal-Mart”. In tough economics times, that is not the place to be in especially when most of your locations sit across the street from the other guy’s.

At least in my area Target’s electronics section is woeful compared to the new redesigned one at Wal-Mart. Since this area seems to be the last bastion of consumer spending, this is now a huge plus for Wal-Mart at Target expense. Target used to be hip, with the iPhone, Wal-Mart now is.

What message is Target projecting to the consumer? I can’t name it. Too be honest I do not remember the last time I saw a Target ad on TV. Can you? If I am, I am certainly not remembering the message it attempted to send me so in that case whatever it said was not effective.

Target in a sense has gone “fetal”.

If Target is banking on consumers returning to prior shopping habits “once things get better”, they ought to watch Professor Quelch, that just is not that way it happens…

Disclosure (“none” means no position):Long WMT, SHLD, None