THE NEW DOMESTIC ECONOMY: How Marketing to Moms and At-Home Millennials Can Help Retailers Thrive During a Recession

KELLY MOONEYPresident and CXO, Resource Interactive and co-author of The Open Brand

PRESENTED BY: SPONSORED BY: SPONSORED BY:

RECESSIONOBSESSION

DEPRESSION

DEPRESSION

THE LOST DECADE?Median household income in 2008

slipped to $50,303 from $51,295in 1998.Source: U.S. Census Bureau, 2009

Abercrombie & Fitch

Percent Change Same Store Sales August 2009 vs. August 2008

Aeropostale

American Eagle

Buckle Gap, Inc.

Hot Topic

JCPenney

Kohl's Limited Brands

Neiman Marcus

Costco

Target

TJX Companies

Source: Retail Forward, November 2009

Saks

Real Personal Consumption per Capita vs. Savings

YE

AR

OV

ER

YE

AR

CH

AN

GE

/ P

ER

CE

NT

Source: EconomPic Data, June 2009

Shifting gears...

CONSUMPTION

SAVINGS

Sales at Goodwill stores open at least a year rose 7.1% in the first three months of 2009 over the same period a year earlier. Source: NYT, June 10, 2009

90% of the U.S. respondents said that their households had reduced spending as a result of the recession. 45% of those who reduced spending did so by

necessity, 55% by choiceMcKinsey Quarterly, March 2009

CONSPICUOUSCONSUMPTION

CONSPICUOUS CURTAILING

CONSPICUOUSCONSUMPTION

CONSPICUOUS CURTAILING

After completing a shopping

5.3% felt guilty and 20% said they were

WWD, April 2009

Jupiter: US Online Retail Forecast, 2007 - 2012

the web is projected to influence 50% of offline sales by 2012

TO

TA

L S

AL

ES

(m

illi

on

s)

2007

50%

2008 2009 2010 2011 2012

48%47%45%

42%38%

Offline Sales

Offline Sales Influenced by Online

Online Sales

Total Online Impact

Q.How has the consumer changed?

Will the changes be enduring?

Is there untapped opportunity in this crisis for online retailers?

Remember the 1990s?

basement but kids, it turned out, were still willing to pay up to fit in

Source: No Logo, Naomi Klein

GEN Y:The prematurely affluent generation

1st wave feel recession is unfair

My generation is being dealt an unfair blow because of this recession

The current situation with housing prices actually makes me feel optimistic about

buying a home

All of the online resources for jobs searches and networking make me feel less

anxious about losing/finding a job

If the employment situation worsens, I may have to move back in with my parents

Most of the people my age that I know are not that worried about the recession

My friends are doing interesting entrepreneurial things to make more money

start my own business

% who agree

Among young adults 18-29

Besides fear, how do most Millennials feel about the recession? A narcissistic sense of being unfairly burdened. Yet some optimism emerges as well.

NO FAIR!

Source: JWT, 2009

Thrift is an alien virtue

OU

R M

ET

HO

DO

LOG

Y

hief nfluencing fficer

SECONDARY SYNTHESIS

150+ articles, Forrester, Nielsen, McKinsey, ExactTarget, JWT, Gen Buy

+PRIMARY RESEARCH

• 20 in-person interviews

• 50 online participants in a 10-day forum discussion with Harris Interactive

• Tested 3 RI visual prototypes

• Conducted survey with BIGResearch

• Partnered with ExpoTV

• Tapped RI Trendwatching practice

hief urchasing fficer

DIGITAL TEEN•Age 13-18, mix of race, income-earning/non-income-earning

•Shops online, regular internet and email user, use of social networking and SMS and owns cell phone.

DIGITAL MOM•Age 30-55, mix of married/single, income, and race

•Shops and purchases online; frequent email user; some use of blogs, social networks, and/or Twitter, online reviews and texting.

UNDERSTAND THE REWIRING

BRANDSHOPPING

DIGITAL

RECESSION

RECESSION

BRANDSHOPPING

DIGITAL

Forced to grow up fasterTypical teen egocentric worries displaced.

Reconciled yet feeling fortunateChance to reset family values, become more resourceful, prepare for the future.

DIG

ITA

L T

EE

NS

DIG

ITA

L M

OM

S

generations who over-

consumed. So I hope we can learn from their mistakes and be the

generation that lives within

81% of household heads say

that kids are aware of the recession and the

impact it is having on household budgets.

Source: Ad Age, April 2009

Alicia, 18

Recession-related issues have replaced more typical teenage ego-centric worries as their top concerns. (Among teenagers 13-19)

2nd wave facing recession head-on

If there will be good jobs when I graduate

things I like because of the recession

How my parents are doing money-wise

The condition of planet Earth that will be left to my generation

How attractive I am to others

Which college I/my family can afford

Source: JWT, 2009

Which college will accept me

How many friends I have

How popular I am at school

Keeping up with what other kids my age haveBase = 100

293

251

249

221

201

180

151

143

92

78

75

73

parentsgrandparents, aunts & uncles

jobs (babysitting, dog walking, etc.)

eBay, Craigslist

allowance

Teens have become more enterprising, unemployment at record high 26%

recession can come on and how long it can take to get

out of one.

set a good example for my children and

teach them to be smarter

lesson in how to live within

your means and separatewants from needs.

Pamela, 47

Alanna, 34

BRANDSHOPPING

DIGITAL

RECESSION

Savvier about financing their purchasesHave discovered online research, coupons, clearance racks, selling and swapping.

Smarter, prouder about living with lessDistinguishing between needs vs. wants, relying on codes and coupons, shopping clearance first.

DIG

ITA

L T

EE

NS

DIG

ITA

L M

OM

S

actually save my money before I make a purchase.

business as a young man

69% of young people now

research all purchases before they buy anything.

Source: OTX, May 2009

John, 16

Luke, 13

Over the next five years,moms of teens plan to:

57% consider purchases carefully57% be more price conscious55% stick to a budget57% dine out less

Source: BIGResearch, July 2009

habits will not change back once the recession is over. We are not lacking for the basics and still have a wonderful life. Less is more

Coupon sites have been

the second-most-visited category on the Internetbehind job sites for about a year.

Source: eMarketer, May 2009

Blanca, 43

BRANDSHOPPING

DIGITAL

RECESSION

Holding outDeferring purchases and selectively trading down or changing channels

Trading WAY down

before their own; rethinking luxury

DIG

ITA

L T

EE

ND

IGIT

AL

MO

M

Brand loyalty is increasingly important among 13-21 year

olds, as 73% now shop at a fixed group of stores.

to give up. I notice the difference in quality so I usually compromise by

buying good brands on sale.

Source: Euro RSCG Discovery survey, May, 2009

any brands. I maybe

but I still buy the same

Alicia, 18

David, 17

Favorite Brands During the Recession, Resource Interactive and Harris Interactive, 2009

SHOPPING

DIGITAL MOMS Favorite Brands During the Recession, Resource Interactive and Harris Interactive, 2009

specific brands anymore. I

realized that

a $300 purse as much as my kids need clothes and

Target shopping going now ....previously it was

43% are buying store brands instead of national or high-end brands.

Source: TNS Retail Forward, August 2008

Keri-Anne, 32

Sheryl, 49

BRANDSHOPPING

DIGITAL

RECESSION

Seeking independence from adults through digital devices

more ways to experience freedom

Seeking control and connectionA means of getting answers and more value, monitoring kids, finding social fulfillment

DIG

ITA

L T

EE

NS

DIG

ITA

L M

OM

S

-generation gap between under-twenty and over-

progression of technology in the

GenBuY, October 8, 2009

% N

ET C

HA

NG

E IN

USA

GE

Net Change in Communication Usage by 15-17 year olds in last 6 months

Source: Exact Target, July 2009

Text SocialNetwork

Email

Instant Message

% more often - % less often

• Texting, social networking grow at IM's expense

• Email usage rising slightly, significantly more among smartphone owners (25% of teens)

44

25

4

(7)

Reliance on texting and SNing

focused on communication

that iPhones are the new jean.

Most of 8-14 year olds report

having online chores including sharing pictures with relatives (38%) and getting driving directions (35%).

Source: GenBuY, October 8, 2009

DIGITAL = Teenage Freedom

Source: AdAge.com, April 2009

almost always check online

Louise, 49

40% of total online spending came from $100K HH consumers, who increased shopping by 17% in Q4, 2008.

Source: comScore, 2009Tracee, 51

Moms with teens said the internet...

46% Helped me save money through access to easier

price comparisons, coupons, and deal alerts.

41% Helped me become a smarter shopper; product

reviews and ratings, blogs, and product information has helped me make more informed purchases.

21% Helped me make money through selling things I

no longer need on sites like Craigslist, eBay, etc.

SHOPPING

DIGITAL MOMS Source: BIGresearch and Resource Interactive, August 2009

UNDERSTAND THE REWIRING

Listen with a new ear let go of truisms!

Seek to understand the clashing value systems

Identify new segments to serve or new ways to deliver value

UNDERSTAND THE REWIRING

DECONSTRUCT THE (CO-) SHOPPING JOURNEY

EVALUATE RATIONALE

NEGOTIATECOORDINATE PURCHASE

OBSERVE & RE-ARM

I WANT I NEED I WANT

DESIRE BUILD THE CASEPRESENT THE CASE

NEGOTIATE ACQUIRESHARE & SWAP

DIFFUSESELF-

EDUCATE

TEENS:

MOMS:

Check Lucky at

Your Service

app

Earmark magazine

ad

Stream fave TV show on

Hulu

Check out comparison shopping

sites

Search past

emails for promo codes

Google

+ brand name

Post Q. on

favorite mom blog

Google item

Poll friends

on Facebook

wall

Check Mobile

SMS

Visit the web site

Text friends about

meeting at mall

Downloadfilm trailer to iPhone Visit

brand/store site and build

wish list

Check

shopping cart

Check her PayPal

Student Account

Check store for clearance

Review items

held in cart

Assign more

chores in exchange

for $

Send phone pix to Mom

from store

Discuss upcoming gift cards

Post outfit on Polyvore

Upload pix to

Facebookfan page

Ratings&

reviews

List new item on

Craigslist

Wear to game &

take snaps

Say yes on Bill

My Parents

DECONSTRUCT THE (CO-) SHOPPING JOURNEY

Create new hooks that support needs-based shopping and teens' fact-finding zeal

Allow moms and teens to shop together without being together

Look for ways to help moms help teens become financially responsible

UNDERSTANDTHE REWIRING

DECONSTRUCT THE (CO-) SHOPPING JOURNEY

INNOVATE YOUR WAY OUT

MOMS want to feel smart

about how they maximize

their shopping because

they have budget limitations.

However,

for impulse.

TEENS are impressively savvy

with their OWN money

because

transaction more fully.

However, they need help

shopping within a budget.

Very receptive overall

Most indicated this saves time and makes it easier (and more fun) to shop within their budget

Some suggested it makes them smarter about money

Very receptive overall

Some questions/concerns

details and in-store pick-up

See the promise for their teens, as it would teach spending within their means; and ideal for holiday shopping

TEENS MOMS

INNOVATE YOUR WAY OUT

Begin with an Insight Formula

Create rapid prototypes

Test, (fail quickly), learn, launch agility is key!

???

Enable social shopping Add Raves to your

Ratings & Reviews

Stretch budgets with collective gift giving

Monetize your Facebook page

Offer convenience through social media

Use messaging to tap into thrift mentality

Make meaningful service changes based on feedback

Use social networks to share shipping codes or offers

Shift the dialogOffer new utility/fun

Get more relevant at the shelf level

Autofill codesand special offers; deal expiration alerts

A crisis is a terrible thing to waste.

Paul Romer, Stanford economist

www.resource.com

by Kit Yarrow and Jayne O'Donnell

Special thanks to our research partners:

Sponsored by:

thank you.FOR MORE INFORMATION ABOUT RESOURCE INTERACTIVE, EMAIL:

inquiry@resource.com

www.resource.com