Shoppers shift loyalty from brands to retail experiences
Based on years of studying people's shopping habits, Hartman Group's researchers predict consumer loyalty is shifting from products and brands to retailers, particularly those that offer shoppers an experience rather than just goods.
Seattle Times business reporters
Everyone from economists to marketers to social-media experts has an opinion about how the recession will change forever the way people shop.
The market-research firm Hartman Group, in Bellevue, takes a longer view, saying a radical transformation was happening before the recession hit.
Based on years of studying people's shopping habits, Hartman's researchers predict consumer loyalty is shifting from products and brands to retailers, particularly those that offer shoppers an experience rather than just goods.
"People don't relate to brands in the same way they used to when there weren't that many products to choose from," said Hartman Senior Vice President Michelle Barry. "Capturing the attention of the consumer requires different tactics, getting a lot more intimate and experiential."
Hartman hails Apple as one of the few companies that gets it and applauds Procter & Gamble for buying chains in the carwash and men's grooming-products businesses, seeing that as a sign the Cincinnati-based products giant is dipping its toe into retail.
Locally, it points to Beecher's Handmade Cheese in Pike Place Market.
"While the customers are there, they can literally see cheese being made, which reinforces the fact that they're artisanal," said Jarrett Paschel, Hartman's vice president of strategy and innovation. "Their personnel are well versed in cheese-making practices and the cheese world, and it's all reinforced with a host of ancillary products — crackers, cutting boards, etc. — that's also very important."
People who have that experience at Beecher's at the Market will remember it when they see the brand at local supermarkets, he said. (Beecher's is not a Hartman client.)
Beecher's owner Kurt Dammeier knows all about it. "When we started selling in grocery stores three-and-a-half or four years ago, we were concerned that sales at the store might go down because nobody had to come to our store [to buy it] anymore," he said.
"What happened was the opposite. Sales went up. ... Everybody who's been here, every time they buy it at the grocery store they're reliving the memory a little bit."
Dammeier doesn't spend money on marketing or advertising. "Our marketing spend is the ability for our customers to watch us make it and have an experiential kind of touch," he said.
People can visit the much bigger Tillamook Cheese Factory in Oregon, where the cheese costs about half the price, he pointed out. But it's not in a big city, much less a cultural icon like Pike Place Market, so it doesn't reach as many people.
Starbucks is another example of a local company creating an experience for which people pay more than they do for a commodity, Paschel said.
"Starbucks took a tired product category and transformed it into an entire world," he said. "Imagine if someone had walked into Folgers and said, 'We have a new business model for you: Open thousands of stores around the world based around the espresso bean.' It's hard to get somebody to wrap their head around what could be."
Although recent years have seen flagging sales and store closures, Starbucks grew for years at a clip that even its visionary, Howard Schultz, couldn't have imagined early on.
Hartman's researchers think the same thing could be done for all sorts of products. Crayon makers could create worlds of art. Cookie makers could offer baking experiences with tours, contests and ingredients for sale. Soda-pop makers could re-imagine the old-fashioned soda-fountain experience.
Some retailers are starting to get it. Trader Joe's offers its own brand of products that shoppers feel a connection to and talk about with each other, Paschel said.
It and other grocery stores dedicate employees and space to cooking and sampling, in contrast to old-school supermarkets where "someone in a hairnet offers cheese on a cracker that some manufacturer paid to toss your way," he said.
— Melissa Allison
Speaking of Beecher's Handmade Cheese, it won awards for five of the six cheeses it entered in competition at the American Cheese Society's annual judging and competition in Austin, Texas, last week. Other Washington winners came from Black Sheep Creamery in Adna, Lewis County, and Estrella Family Creamery in Montesano, Gray's Harbor County. The competition will be in Seattle next year. — MA
Cartier will have an in-store shop at the new Neiman Marcus opening next month at the Bravern in downtown Bellevue, raising some speculation about whether the French jeweler will remain in downtown Seattle. Cartier's 10-year lease at Pacific Place expires at the end of January, said Lynn Beck, general manager of the Seattle shopping center. "We are negotiating with Cartier to stay beyond" January, Beck said. Cartier declined to comment. — AM
Masins Fine Furnishings & Interior Design announced plans to open a store at the Bravern, its third Seattle-area location. The store will be 2,100 square feet, much smaller than its other locations in downtown Seattle and Bellevue, and will focus on such decorative items as lamps, rugs and pillows. Masins, a fourth-generation, family-owned business founded in 1927 in Seattle, has been working with Bravern developer Schnitzer West on furnishing common areas and model units for two condominium towers. — AM
Greg Hartlein replaced Al Silverman last week as CEO of LifeStyle Events of Bellevue, which runs the trade show Coffee Fest and where Silverman remains chief financial officer. Hartlein has been with Microsoft the past 11 years and was green-coffee director for Caravali Coffee before that. Coffee Fest runs three shows nationally, including one in Seattle scheduled for Sept. 25-27. — MA
Metropolitan Market donated $5,217 to Puget Soundkeeper Alliance, a nonprofit that supports reuse of shopping bags. That's the sum of 5-cent contributions during 2008 from shoppers at the chain's six stores who chose to donate their nickel rebates rather than keep them. — MA
Retail Report appears Fridays. Melissa Allison covers the food and beverage industry. She can be reached at 206-464-3312 or firstname.lastname@example.org. Amy Martinez covers goods, services and online retail. She can be reached at 206-464-2923 or email@example.com