vlcrain17@aol.com

The US Retail Meltdown

Another list came out this week — retail chains closing the largest number of stores this year. No surprise here. We’ve been hearing about closing for months, with every management team blaming the closings on the growth of consumer buying on the Internet.

That’s a convenient excuse, but it’s probably not true. Certainly not in every case.

If Internet shopping were the culprit, we would expect

All retail chains selling the same products to be affected, and
The level of impact to be similar from one chain to the next.

Neither of those is true.

Overall, Kiplinger is calling for a 4% growth in retail sales in 2017 (for the entire year).

That’s the current rate, but it may be optimistic for the year as a whole, as they are also expecting the pace of hiring to slow. (1)
Conversely, 4% isn’t a big deal historically, as the chart below shows.(3) The negative trend in retail sales matches the negative trend in US population growth (now at 0.7% per year and declining).

Population change and retail sales are linked. The number of people in the US drives demand for food and clothing, among other things. We aren’t at the point of negative population growth — something Japan has achieved — but that may be in our future.

24/7WallStreet.com has a list of 25 chains closing at least 60 stores, and some of which (e.g., American Apparel) are closing entirely.(2)

Conversely, TJMaxx, Marshall’s and Home Goods have reported growth in same store sales (sales at stores open at least a year).(4) While sales at TJMaxx rose less than expected in the first quarter of this year (5), it was still an increase, and not the 11.5% decline that Sears has incurred (6).

That’s the point. If e-commerce were a paradigm shift in how consumers shop. We wouldn’t see the variations in results between different stores. It’s time to place the blame where it belongs — on poor decisions by management. Those poor decisions are damaging investors and employees.

That happens when you have management basing decisions on “gut feel” or cutting corners on market research. Not that gut feel is inevitably bad; it’s just very high risk.

And finally,

The people who are advocating border walls need to understand the economic impact of lower population growth in the US.

(Originally posted on Crain’s Comments, vlcrain17.wordpress.com)

Sources:

Differentiation Matters

Everyone has “customers” whether you work in sales or not. Everyone does marketing, at a minimum for themselves to get job offers and professional or social recognition. So here’s something that applies to you whether you own a business or not.

There is an old truism in marketing:

— The first company to offer a product bears the brunt of the costs for creating the market for that product

— The second company reaps the profits

— The third company captures crumbs from the first two

— The fourth company loses money

The underlying truth is that if you are doing the same thing that others are doing, and nothing different, then you end up competing on price — and that’s a hard strategy with an iffy future. If what you do is a “commodity” and you’re competing on price, well, there’s always going to be someone cheaper. If you can’t keep reducing your costs, eventually you get squeezed out. It’s just a matter of time. (The social analog is the person who is constantly buying lunch for “friends.” That’s expensive and it doesn’t make for solid relationships.)

Think about the cases you know:

(a) SEO consultants: How many companies do this? The TopSEO.com list has 100 companies, and there are myriad others across the globe. I get spammed by a couple of new ones every week. Why pick one over another?

(b) Plumbers: How do you pick one licensed plumber over another? Sure you can ask your neighbor who they used, but how much does your neighbor know about plumbers?

(d) Car mechanics?

(e) Insurance agents? There’s a reason why there’s a 98% washout rate among first year agents.

Who helps you choose by giving a solid reason why they are better than their peers? By solid, I mean a reason that isn’t completely subjective and means something of value to you. Businesses are better at giving people reasons not to choose them — for example, by not returning calls or missing appointments or providing lousy products or services. Positive differentiation is harder and more profitable.

How do you help your prospects choose? Do you give them a solid reason for going with you?

Better, Faster, Cheaper

There are a lot of reasons for doing research, but they all boil down to the basics:

Make more money.
Make fewer mistakes (which take away from making more money).

Every new product, new ad, new promotion, new sales office or branch location is an investment. They work if they generate more revenue than they cost.

You can find out the hard way, or you can use research to hedge your bet in your favor.

That works if you get the information when you need it and the cost of the information doesn’t affect your ROI.

That’s where Crain Associates fits.

Business planning
Brand positioning
Location analysis
Product features and pricing optimization
Sales channel optimization
Customer loyalty
Ad effectiveness (electronic and print)

We’re y0ur resource when you need bankable information now.

Your Customers: Know More, Spend Less, No Compromises

You know that what your customers tell their friends or blog about you affects your business. What they think about you affects your staff morale and retention.

You know that preventing a problem is less costly than fixing one. You know that repeat sales to a satisfied client is less costly than finding a new one. And heaven help you if a problem gets referred to lawyers or regulators.

Taken together, these factors largely determine how much revenue and profit you make and how well you’re going to sleep at night.

How much do you really know about what your clients are thinking?

Some business managers depend on customer feedback – largely complaints after the damage is done.
Some have customers fill out report cards using a rating scale. That’s nice, but what does a “4” rating really mean? Do you know what you need to do to raise it?

When was the last time you saw a research report that gave you . . .

A very specific set of items to fix, as well as
A clear list of items that differentiate you from your competitors that you can use in marketing?

The Crain method involves hybrid interviews that combine quantitative data with open ended discussions of the reasons for scores. The quantitative data can be gathered by web or phone, but the conversation is by phone and we record the conversations to make sure we have exactly what the respondent tells us.

We then sift the data, connect the dots, and generate specific recommendations supported by numbers and verbatim comments.

This is a time-consuming process, but, as a virtual firm with no overhead, we can do this for less than most research firms charge for a simple web survey. The cooperation rates we achieve are excellent, ranging from 50-80% participation.

The truth will set you free, and we can help you find it.

Retirement: The Fading Dream

1751d8cfd8e2e31a9f5a6e515c5cc51d

Most Americans today will never be able to afford to retire. Period. Retirement was a concept basically created in the 1950s, and a number of factors have come together to end the dream for the great majority of Americans. The end of the dream in turn necessitates changes in how Americans live. These changes will affect the economy and politics. Arguably, they already are.

Here are some of the fundamentals:

The average US household has $35,000 in funds at age 65.
The average Social Security payment in 2016 is $1,341 per month.
https://faq.ssa.gov/link/portal/34011/34019/Article/3736/What-is-the-average-monthly-benefit-for-a-retired-worker
According to Fidelity Investments, the average couple will encounter $245,000 in out-of-pocket health care expenses after age 65.
https://www.fidelity.com/about-fidelity/employer-services/health-care-costs-for-couples-retirement-rise
The Fidelity estimate excludes long term care costs. According to Morningstar, we need to add 2.4 years of nursing home or long term care costs, at approximately $13,000 per month per person, to the Fidelity total. Subtracting what Medicare covers of nursing home expenses, that’s roughly $347,000 per person.

Basically, the average person needs upwards of $800,000 in liquid assets to retire.

It’s pretty easy to see that these numbers don’t work for most people. And that doesn’t consider the 10% of seniors who are caring for a grandchild.

So, how can the average person cope?

They can work. However, that takes jobs away from younger workers. Job creation in the US isn’t strong enough to support both an influx of new high school and college grads and oldsters returning to work. However, in this competition, older workers are handicapped as large corporations don’t like to hire them. Seniors will return to the labor market at a much lower rate of pay than they had previously.
They can die at an earlier age. In the US, low income males are doing that today, having lost 4 years of life expectancy since 2000.
They can deplete assets and let state aid contribute to covering expenses. However, that means living one’s last years in extreme poverty.
They can move in with children. The incidence of multi-generational families is on the rise. That will change the kind of home buyers will want.
They can move outside the US to where health care is much less costly. The number of US citizens who don’t live in the US is increasing, with Central America as the destination of choice for emigres.

Several of these trends suggest that there will be a glut of single family homes on the market in the near future, with another round of declining home prices, underwater mortgages and foreclosures.

The growing volume of available labor may but a cap on wage increases, and increase deflationary pressure.

The fundamental problem is that today’s Americans reached adulthood with certain expectations about how their life would be. Those expectations are being dashed, generating the anger that is playing out in the current election season. The disappointment and anger is still in its early stages, and may get much worse.

8d7662cbfb04eed374117b5965b67f06

In this context, its rather amazing that so many people wanted to run for the Presidency this year. The next four years are likely to be traumatic, and the next chief executive is likely to leave office after one term as a much hated individual.

About Crain Associates Research LLC

Who we are

CARLLC is a boutique research practice based in Princeton, NJ. Our focus is on obtaining the best possible information for clients, and we use an array of primary and secondary data collection and desk research/meta analysis techniques to do that.

Methods

Surveys (phone, mail, web)
Depth interviewing (executives, doctors, consumers)
Focus groups
Statistical analysis (SPSS and R) and modeling
Forecasting
Scanning of public data sources

Advantages — Quality and Costs

As a boutique, we limit the number of projects we do each year in order to give each assignment the level of attention and effort it warrants. However, as a boutique, we don’t carry a corporate overhead burden. So in most cases, we will offer a pronounced cost advantage over other full service research firms.

Examples of recent projects

Customer satisfaction, including CRM cleaning
Custom software development clients (enterprise IT executives) — US,
India, China
Chemical products
Dermatology product users
Government logistics program managers
Employee surveys
Depth interviews with medical professionals (e.g., neurologists,
oncologists, hospital IT executives)
Depth interviews with large animal veterinarians