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Construction Marketplace 3 5 Thursday, January 23, 2020 Create Community, Never Bore Your Customers By Lorrie Baumann The young people who are in their late teens and early 20s grew up in a world in which material things were cheap and consumers' choices became limitless. Now they're less likely to value either, according to Michael Dart, a Partner in the Consumer/Retail Practice at A.T. Kearney, a global consulting firm. He spoke to housewares executives during CHESS, the International Housewares' Association's annual gathering for a Chief Housewares Executive SuperSession. That has led young people to value abstract qualities like meaning and con- nection over physical objects, and it's why the mass market is on its way out, according to Dart. Businesses that sur- vive will be those that form meaning and connection to their brands within the minds, hearts and spirits of their con- sumers, he said. "With the mass market breaking down, what becomes absolutely critical for the consumer, for the retailer and for the brands you offer is one of two things: a great experience – there's lots of different ways to think about experience. Or you have to have some incredible meaning and relationship to that con- sumer," he added. "The brand really has to stand for something." That provides renewed opportunities for independent retailers, who are in a better position to create meaning around their brands and to forge relationships and emotional connections to their cus- tomers. "One model that is going to flourish are the local stores, the local independent stores," he said. "People like to shop locally; they like to have a con- nection to the community. They actually also like to know that the people there are knowledgeable about what they're buy- ing and what they're getting." Economic and Social Trends Shaping the Retail Landscape Dart predicts that most shopping malls are simply going to disappear from the landscape as consumers grow more and more bored with commoditized con- sumer goods with which they feel no par- ticular personal connection, he said. "Stores are going to be fundamentally transformed – they need to be trans- formed," he said, pointing out that we call stores by a name that implies that their entire purpose is as a storage point where goods wait for buyers to come and get them. Amazon has upturned that entire concept by creating shopping experiences that deliver on convenience in a big way. Dart points out that digital sales have been consistently outperform- ing sales in brick-and-mortar sales for more than 20 years, and e-commerce now captures about 17 percent of core retail sales, and this is a trend that's accel- erating. "It's not slowing down – this shift to convenience," he said, adding that convenience has grown increasingly important to consumers. "Amazon is driving a lot of that with what they offer, which is incredible convenience, but we also notice that the consumer is just valu- ing their time, valuing how they spend every dollar, ever hour differently than before." The convenience that Amazon is able to offer is propelling the growth of the online retailer. "Amazon has pene- trated the retail market at almost the same speed Walmart did, but what we notice now, 20 years into Amazon, is that the growth rate is accelerating," Dart said. "Our belief is that Amazon is not only going to surpass Walmart in terms of its penetration of total retail sales; it's going to do it much faster. It's actually acceler- ating in that direction." Now peer-to-peer commerce plat- forms like Etsy are going even farther to meet consumer needs by giving con- sumers a way to shop for customized items that they can feel a personal con- nection with. "We're seeing a lot of re- commerce – people selling different things; and as technology develops, and it gets a lot easier for these mini-mer- chants to get payment from their cus- tomers, people will be able to do this without a platform in between," he said. "It's an existential threat to Amazon that one day in the future there could be a platform-less marketplace – lots of local people trading with each other in ways you could never imagine." Investment in shopping malls is declining on Wall Street in a way that suggests to Dart that we can expect to see a high proportion of existing malls disap- pear over the next few years. There are roughly 1,400 shopping malls across the country now, of which about 200 are high-end specialty malls and around 300 or so are strong regional malls, he said. The other 900 malls "actually need to disappear," according to Dart. "Wall Street's woken up to the fact that the mall structure is going to go through a massive economic dislocation. Some people, I think, are still in denial," he said. Successful Retailers Create Connection Independent specialty retailers have some opportunities to become the last places left on the retail landscape where consumers actually go to shop, according to Dart. "Number one, you can become a great entertainment destination," he said. Or you can work to make sure that your store is an active part of the community, the way that farmers markets are part of the communities in which they operate. "The farmers market you go to on a Sunday, and it's incredibly vibrant. There's a lot of people; there's music; there's food; people are talking to each other, discussing different things," he said, drawing a sharp contrast with the conventional supermarket that also offers fresh produce. It's all food; but what's sold at the supermarket is offered in an environment that doesn't offer the excite- ment and entertainment of the farmers market. "Retailers that don't define them- selves in either one of these spaces [as an entertainment venue or as a part of the community], I think are really going to struggle in terms of getting great eco- nomic returns." To look for a model to emulate, look to independent bookstores, which took a beating when Barnes & Noble and Borders came into the market. They took another beating with the ascendance of Amazon. Now Borders is gone; Barnes & Noble is struggling. Independent book- stores are one of the fastest-growing seg- ments of retail, according to Dart. Among the attributes contributing to that growth is their curated assortment that plays into customer desires to connect to the com- munity, for customization and conven- ience. "Local bookshops have just done a phenomenal job of that," he said. "It's clear the consumer is responding to them." He predicts that this particular sector will continue to grow. Dart recommends that retailers think about how they can help their consumers see their stores as a memo- rable place that's far from boring, although, admittedly, that's not neces- sarily easy to do. "Use services as the stage and products as the props to create a memorable event that only exists in the mind of an individual at that time who has been engaged on an emotional, physical, intellectual or even spiritual level," he said. This means understand- ing what's really bringing your cus- tomers into your stores and appealing to that. Dart calls this empathetic retailing. "You really don't view your consumers as someone who's just going to be buy- ing more product, you're really thinking very much differently about their lives," he said. As an example, he points to Patagonia's success with a 2011 adver- tisement directing its audience not to buy the outdoor outfitter's latest new jacket unless they really needed it. The ad actu- ally suggested that prospective customers think about whether they could buy a used jacket and use that instead of buying anything new. During the campaign, Patagonia sent out an email to its cus- tomers on Black Friday asking them: "We ask you to buy less and to reflect before you spend a dime on this jacket or anything else. "Environmental bankruptcy, as with corporate bankruptcy, can happen very slowly, then all of a sudden. This is what we face unless we slow down, then reverse the damage," the email read. Environmental concern is at the core of the brand's ethic, and so this message res- onated with Patagonia customers while it also, subtly, communicated a message to prospective customers that Patagonia's products are high quality and durable – a message that ultimately allowed the com- pany to raise its prices, according to industry observers. "That was an incredible branding message for them, because it really did answer a lot of the questions that their constituents have, and that's why Patagonia has such a phenomenal follow- ing," Dart said, suggesting that retailers think about, "What would be the equiva- lent message that you would have for your brand that defines it in this interest- ing way, as Patagonia did, that would truly connect with the customer?" he said. "It's actually an extraordinarily dif- ficult exercise to do." "How you connect with consumers is extremely important," he added. In a world of product ubiquity, consumers are looking for real connection, according to Dart. "It's all about fans, and how do retailers and brands create those fans?" Melitta Launches New Line of Pour-Over Specific Coffee Filters Melitta has announced the release of Melitta Pour-Over Coffee Filters. The new line of paper coffee filters is specifi- cally designed to optimize coffee extrac- tion when brewing coffee through pour- over coffee makers. Melitta Pour-Over Coffee Filters are designed with the optimal absorbency, tex- ture, strength and filtering properties for pour-over brewing. The filter's micro-fine perforations allow the full coffee flavor to filter through at the perfect rate, while pre- venting unwanted sediments. The result is a rich, flavorful cup that brings out the best characteristics of the coffee. "This company was founded on the pursuit of better coffee and our new pour- over filters are the latest breakthrough in our constant search for a better cup," said Chris Hillman, Vice President of Marketing, Melitta North America. "With the continued rise in popularity of pour-over brewing in the home, it's an important addition to our best-selling line of filters and we're excited for consumers to taste the difference." Since its invention in 1908 by Melitta Bentz, pour-over brewing has been synonymous with hand-crafted coffee. The method combines optimal water tempera- ture with the agitation resulting from its cone- shaped design. Pour- over brewing enables coffee lovers to quickly and easily hand-craft delicious coffee in the home. "Pour-over brewing has long been seen as a superior method of extracting the full characteristics of coffee," said Dan Pabst, Product Development Manager, Melitta North America. "These filters take that another step forward, improving on the saturation and extrac- tion to further enhance the flavor profile of the final product." The new filters feature a double crimp design to pro- tect against bursting, helping consumers avoid sediment in their coffee and messy kitchen mishaps. They are also 100 percent compostable and certified by the Forest Stewardship Council, an independent, non-profit, non-governmental organiza- tion, which aims to contribute to the improvement of forestry worldwide. Melitta Pour-Over Coffee Filters will be available at retailers nationwide and online. To view Melitta's full line of Pour-Over™ coffeemakers, coffee and paper filters, and small-batch roasted cof- fees, visit www.melitta.com.