AZ Week: In Retail, Consumers Take Charge

Technology and the recession have put consumers in control of retailing, requiring businesses to increase the attention they pay to customers, several retailing experts say.

The revelation came from participants in the University of Arizona's annual Global Retailing Conference, which concluded a two-day run Friday at the J.W. Marriott Starr Pass Resort in Tucson.

In interviews for Friday's episode of Arizona Week, several retail executives and entrepreneurs cautioned that they and their fellow businesswomen and businessmen could ignore their customers only at the peril of their businesses.

"It's amazing, really--now the customer is in control of the retail market," said Martha Van Gelder, director of the UA Terry J. Lundgren Center for Retailing, which hosted the conference. "That's why we're gathering ... to talk about the impact that not only technology has but the consumer's everyday purchases in retail."

Terry J. Lundgren, a UA graduate who founded the center based on his success as a retail executive, agreed with Van Gelder's assessment.

“It’s about how consumers are shopping, how they’re different and what their expectations are," said Lundgren, who is chairman, president and CEO of Macy's Inc. "Consumers want immediate satisfaction, immediate response to their demands.”

Van Gelder and Lundgren said 21st century shoppers have "omni-channel retailing" abilities, allowing them to check and compare prices and other qualities among competitors when literally standing in the store.

"Technology is really helping consumers make better decisions and faster," Van Gelder said. " ... We know that by 2015, according to one study, that the majority of decisions around purchasing will happen in the store by digitally enhanced transactions. So that's quite a change."

Lundgren said technology, including online shopping, has changed the retail consumer experience permanently, and yet brick-and-mortar stores continue to be the dominant means for Macy's to reach its customers.

Ninety percent of Macy's $26 billion in revenues last year came from brick-and-mortar store sales, Lundgren said. At the same time, online sales revenues increased 40 percent for the year, on top of increases of 20 percent in 2009 and 30 percent in 2010, he said. The expectation for this year is for another 40-50 percent increase online, he said.

Old-fashioned business ideas still can bring about success, including those filling niches and specializations, as demonstrated by several participants in the conference.

Among them was Australian-born entrepreneur Poppy King, whose New York-based Lipstick Queen company has grown immensely in 20 years by dint of her marketing savvy and recognition of a niche to be filled.

"What I saw was something very specific in terms of product, which was non-shiny lipstick ... matte lipsticks were considered old-fashioned, or had gone out of fashion," King told Arizona Week. "Yet, I knew that there was myself and there was a consumer for them. It may not be a multi-million, -million, -trillion dollar company, but there was certainly a good small business proposition."

Others also told of opportunities to make money with old-fashioned concepts. Among them is Buffalo Exchange, a vintage and second-hand clothing operation that began as one small store in Tucson in 1974 and has expanded to 42 company stores and three franchise stores in 15 states.

"We were the pioneers in this particular industry, so we have our own model, which consists of buying, selling and trading new and recycled fashion," Buffalo Exchange founder and president Kerstin Block told Arizona Week. "About 80 to 90 percent of everything we have in our stores is recycled."

Block said the recession was good for Buffalo Exchange, because people became much more price conscious, and that initial awareness created many new ongoing customers.

The business had $73 million in revenues last year and is looking to expand with more locations in New York City and entry into the Atlanta and Nashville retail markets, Block said.